`SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                   For the Fiscal year ended December 31, 2003

                          COMMISSION FILE NO. 01-21617

                             THE QUIGLEY CORPORATION
                             -----------------------
             (Exact name of registrant as specified in its charter)

             NEVADA                                            23-2577138
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                          Identification Number)

              (MAILING ADDRESS: PO Box 1349, Doylestown, PA 18901)

KELLS BUILDING, 621 SHADY RETREAT ROAD, DOYLESTOWN, PA            18901
--------------------------------------------------------------------------------
     (Address of principle executive offices)                   (Zip Code)

                                 (215) 345-0919
                                 --------------
              (Registrant's telephone number, including area code)

       SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: NONE

SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT: COMMON STOCK
                                                               ($.0005 PAR
                                                               VALUE) COMMON
                                                               SHARE PURCHASE
                                                               RIGHTS

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. |X| Yes |_| No

Indicate by the check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-X is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K. |_|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). |_| Yes |X| No

The  aggregate   market  value  of  the   registrant's   common  stock  held  by
non-affiliates  was $59,305,107 as of June 30, 2003,  based on the closing price
of the common stock on the Nasdaq National Stock Market.

Number of shares of each of the  Registrant's  classes of securities (all of one
class  of  $.0005  par  value  Common  Stock)  outstanding  on March  12,  2004:
11,512,755.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference in this Report
on Form 10-K:

1.    Information  set  forth  in Part III of this  report  is  incorporated  by
      reference  from the  Registrant's  Proxy  Statement  for the  2004  Annual
      Meeting of Stockholders.

                  THE EXHIBIT INDEX IS LOCATED ON PAGES 23-24.


                                TABLE OF CONTENTS

Part I                                                                     Page
                                                                           ----

     Item   1.    Description of Business                                 3 - 10

            2.    Description of Properties                                   10

            3.    Legal Proceedings                                      10 - 12

            4.    Submission of Matters to a Vote by Security Holders         12

Part II

            5.    Market for the Company's Common Equity and Related
                     Stockholder Matters                                 12 - 13

            6.    Selected Financial Data                                     14

            7.    Management's Discussion and Analysis of Results of
                     Operations and Financial Condition                  15 - 20

            7A.   Quantitative and Qualitative Disclosure About Market
                     Risk                                                     20

            8.    Financial Statements                                        21

            9.    Change in and Disagreements with Accountants on
                     Accounting and Financial Disclosure                      22

            9A.   Controls and Procedures                                     22

Part III

            10.   Directors and Executive Officers of the Registrant          22

            11.   Executive Compensation                                      22

            12.   Security Ownership of Certain Beneficial
                     Owners and Management                                    22

            13.   Certain Relationships and Related Transactions              22

            14.   Principal Accountant Fees and Services                      22

Part IV
            15.   Exhibits, Financial Statement Schedules and Reports
                     on Form 8-K                                         23 - 24

Signatures                                                                    25


                                       -2-


FORWARD-LOOKING STATEMENTS

In addition to  historical  information,  this Report  contains  forward-looking
statements.  These  forward-looking  statements are subject to certain risks and
uncertainties  that could cause actual results to differ  materially  from those
reflected in these forward-looking  statements.  Factors that might cause such a
difference include,  but are not limited to, management of growth,  competition,
pricing pressures on the Company's product, industry growth and general economic
conditions.  Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking  statements,  which reflect management's opinions only as of the
date hereof.  The Company undertakes no obligation to revise or publicly release
the results of any revision to these forward-looking statements.

CERTAIN RISK FACTORS

The  Quigley  Corporation  makes  no  representation  that  the US Food and Drug
Administration or any other regulatory agency will grant an Investigational  New
Drug ("IND") or take any other action to allow its formulations to be studied or
marketed. Furthermore, no claim is made that potential medicine discussed herein
is  safe,   effective,   or  approved  by  the  Food  and  Drug  Administration.
Additionally,  data that demonstrates activity or effectiveness in animals or in
vitro tests do not necessarily mean the formula test compound, referenced herein
will be effective in humans.  Safety and effectiveness in humans will have to be
demonstrated  by means of adequate and well controlled  clinical  studies before
the clinical  significance of the formula test compound is known. Readers should
carefully  review the risk factors  described in other sections of the filing as
well as in  other  documents  the  Company  files  from  time to time  with  the
Securities and Exchange Commission.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

The  Quigley  Corporation  (WWW.QUIGLEYCO.COM,  hereinafter  referred  to as the
"Company")  is a Nevada  corporation  which was organized on August 24, 1989 and
commenced business operations in October 1989.

The  Company's  business is the  manufacture  and  distribution  of  cold-remedy
products to the consumer through the over-the-counter market place together with
the sale of proprietary  health and wellness products through its direct selling
subsidiary.  The Company's key product  Cold-Eeze(R),  a zinc gluconate  glycine
lozenge,  is proven in two double-blind  clinical studies to reduce the duration
and severity of the common cold symptoms by nearly half.  Cold-Eeze(R) is now an
established product in the health care and cold-remedy market.

Darius International Inc., ("Darius"), the Health and Wellness segment, a wholly
owned  subsidiary  of the Company,  was formed in January 2000 to introduce  new
products  to the  marketplace  through a network  of  independent  distributors.
Darius is a direct selling  organization  specializing in proprietary health and
wellness  products,  which commenced  shipping product to customers in the third
quarter of 2000. On January 2, 2001,  the Company  acquired  certain  assets and
assumed certain  liabilities of a privately held company  involved in the direct
marketing and distribution of health and wellness products.

The formation of Darius has provided  diversification to the Company in both the
method of product  distribution  and the broader range of products  available to
the  marketplace  serving as a balance  to the  seasonal  revenue  cycles of the
Cold-Eeze(R) branded products.

In January 2001, the Company formed an Ethical  Pharmaceutical Unit, Pharma, the
Ethical  Pharmaceutical  segment,  that is under the  direction of its Executive
Vice President and Chairman of its Medical Advisory Committee.  The formation of
Pharma  follows  the Patent  Office of The  United  States  Commerce  Department
confirming the assignment to the Company of a Patent Application for the "Method
and  Composition  for the Topical  Treatment of Diabetic  Neuropathy"  which was
issued and extends through  December 21, 2020. The  establishment of a dedicated
pharmaceutical   subsidiary  may  enable  the  Company  to  diversify  into  the
prescription drug market and to ensure safe and effective  distribution of these
important  potential new products  currently  under  development.  At this time,
three  patents  have been  issued and  assigned to the  Company  resulting  from
research activity of Pharma.

During 2000, the Company acquired a 60% ownership  position in Caribbean Pacific
Natural Products, Inc. ("CPNP"), a leading developer and marketer of all-natural
sun-care and skincare products for luxury resorts, theme parks and spas. In


                                       -3-


December  2002,  the Board of Directors  of the Company  approved a plan to sell
CPNP. On January 22, 2003,  the Company  completed the sale of the Company's 60%
equity interest in CPNP to Suncoast Naturals, Inc. ("Suncoast").  See discussion
in Notes to Financial Statements, Note 3 - Discontinued Operations.

DESCRIPTION OF BUSINESS OPERATIONS

Since  its  inception,  the  Company  has  continued  to  conduct  research  and
development   into  various  types  of   health-related   food  supplements  and
homeopathic cold remedies.  Initially,  the Company's business was the marketing
and  distribution  of a  line  of  nutritious  health  supplements  (hereinafter
"Nutri-Bars"). During 1995, the Company reduced the emphasis in the marketing of
the Nutri-Bars and commenced focusing its marketing and research and development
resources  towards the Company's  patented  Cold-Eeze(R)  zinc gluconate glycine
cold relief products.

Prior to the fourth  quarter  1996,  the Company had minimal  revenues  and as a
result  suffered  continued  losses due to ongoing  research and development and
operating expenses. However, 1997 resulted in significant revenue increases as a
result of the Company's  nationwide  marketing campaign and the increased public
awareness through media public service announcements of the Cold-Eeze(R) lozenge
product.

Since  June  1996,  the  cold-remedy   segment  has  concentrated  its  business
operations on the  manufacturing,  marketing and  development of its proprietary
Cold-Eeze(R)  cold-remedy lozenge products and on development of various product
extensions.  These products are based upon a proprietary zinc gluconate  glycine
formula,  which in two  double-blind  clinical  studies  has shown to reduce the
duration  and  severity of the common  cold  symptoms.  The Quigley  Corporation
acquired worldwide  manufacturing and distribution rights to this formulation in
1992 and  commenced  national  marketing in 1996.  The demand for the  Company's
cold-remedy products is seasonal,  where the third and fourth quarters generally
represent the largest sales volume for cold-remedy.

Darius is a direct selling  organization  specializing in proprietary health and
wellness  products,  which commenced  shipping product to customers in the third
quarter of 2000.

Pharma was formed for the purpose of developing  naturally derived  prescription
drugs, cosmeceuticals,  and dietary supplements.  Pharma is currently undergoing
research and development  activity in compliance  with regulatory  requirements.
The Company is at the initial stages of what may be a lengthy process to develop
these patent applications into commercial products.

During 2003,  approximately 97% of the Company's  revenues from Cold-Eeze(R) and
Darius originated in the United States with the remainder being  attributable to
international trade.

Financial information regarding the Company's operating segments is set forth in
Item 8, Notes to Financial Statements, Note 4 - Segment Information.

PRODUCTS

COLD-REMEDY PRODUCTS

Cold-Eeze(R),   a  zinc   gluconate   glycine   formulation   (ZIGG(TM))  is  an
over-the-counter  consumer  product  used to reduce the duration and severity of
the common cold and is sold in lozenge, sugar-free tablet and nasal spray forms.
During 2003 the Company  launched a Cold-Eeze(R)  nasal spray and  Kidz-Eeze(TM)
Sore Throat Pops. The nasal spray product,  a nasal spray  containing the active
ingredient  Zinc  Gluconate and also  containing  Aloe Vera,  began  shipping to
retail during the second half of 2003.

In May 1992,  the Company  entered into an  exclusive  agreement  for  worldwide
representation,  manufacturing,  marketing  and  distribution  rights  to a zinc
gluconate  glycine lozenge  formulation which was patented in the United States,
United Kingdom, Sweden, France, Italy, Canada, Germany, and is pending in Japan.
This product and  extensions,  are presently  being  marketed by the Company and
also through  independent  brokers and  marketers in the United States under the
trade name Cold-Eeze(R).  A randomized  double-blind  placebo-controlled  study,
conducted  at  Dartmouth  College of Health  Science,  Hanover,  New  Hampshire,
concluded that the lozenge formulation  treatment,  initiated within 48 hours of
symptom onset,  resulted in a significant reduction in the total duration of the
common cold.


                                       -4-


On May 22, 1992,  "ZINC AND THE COMMON COLD, A CONTROLLED  CLINICAL  STUDY," was
published in England, in the "Journal of International Medical Research", Volume
20, Number 3, Pages 234-246. According to this publication,  (a) flavorings used
in  other  Zinc  lozenge  products  (citrate,   tartrate,   separate,   orotate,
picolinate,  mannitol or sorbitol)  render the Zinc inactive and  unavailable to
the patient's nasal passages,  mouth and throat,  where cold symptoms have to be
treated,   (b)  this  patented  zinc  gluconate  glycine  formulation   delivers
approximately 93% of the active Zinc to the mucosal surfaces and (c) the patient
has the same  sequence  of symptoms  as in the  absence of  treatment,  but goes
through the phases at an accelerated rate and with reduced symptom severity.

On July 15, 1996,  results of a new randomized  double-blind  placebo-controlled
study on the common cold were published, which commenced at the CLEVELAND CLINIC
FOUNDATION  on October 3, 1994.  The study called "ZINC  GLUCONATE  LOZENGES FOR
TREATING THE COMMON COLD" was  completed and published in THE ANNALS OF INTERNAL
MEDICINE - VOL. 125 NO. 2. Using a 13.3mg  lozenge  (almost half the strength of
the  lozenge  used in the  Dartmouth  Study),  the  result  still  showed  a 42%
reduction in the duration of the common cold symptoms.

In April 2002, the Company announced the statistical  results of a retrospective
clinical  study that suggests that  Cold-Eeze(R)  is also an effective  means of
preventing  the common cold.  This  adolescent  study  indicated that when taken
daily,  Cold-Eeze(R)  statistically  lessens  the number of colds an  individual
suffers per year,  reducing the median from 1.5 to zero.  These findings are the
result of analyzing three years of clinical data at the Heritage School facility
in Provo,  Utah.  The study also found that the use of  Cold-Eeze(R)  to treat a
cold statistically reduces the use of antibiotics for respiratory illnesses from
39.3% to 3.0%  when  Cold-Eeze(R)  is  administered  as a first  line  treatment
approach to the common cold.  Additionally,  the study  reinforces  the original
clinical trials,  concluding that Cold-Eeze(R)  reduces the median duration of a
cold by four days. In April 2002, the Company was assigned a Patent  Application
which was filed with the Patent Office of the United States Commerce  Department
for the use of  Cold-Eeze(R)  as a  prophylactic  for cold  prevention.  The new
patent  application  follows the results of the adolescent study at the Heritage
School  facility.  In May 2003,  the Company  announced the study  findings of a
prospective study,  conducted at the Heritage School facility in Provo, Utah, in
which 178 children  ages 12 to 18 years were given  Cold-Eeze(R)  lozenges  both
symptomatically and  prophylactically  from October 5, 2001 to May 30, 2002. The
study found a 54% reduction in the most frequently observed cold duration. Those
subjects not receiving treatment most frequently experienced symptom duration at
11 days compared with 5 days when lozenges were  administered,  a reduction of 6
days.

In the second half of 1998, the Company  launched  Cold-Eeze(R)  in a sugar free
version of the product to benefit  diabetics and other consumers  concerned with
their sugar intake.

The business of the Company is subject to federal and state laws and regulations
adopted  for  the  health  and  safety  of  users  of  the  Company's  products.
Cold-Eeze(R)  is a homeopathic  remedy that is subject to regulations by various
federal,  state  and  local  agencies,  including  the FDA  and the  Homeopathic
Pharmacopoeia of the United States.

The Company competes with suppliers varying in range and size in the cold-remedy
products  arena.  Cold-Eeze(R),  which  has  been  clinically  proven,  offers a
significant  advantage over other suppliers in the over-the-counter  cold-remedy
market.  The  management  of the  Company  believes  there  should  be no future
impediment on the ability to compete in the marketplace now, or in the immediate
future,  since factors concerning the product,  such as price,  product quality,
availability,  reliability, credit terms, name recognition, delivery and support
are all properly  positioned.  The Company has several  Broker,  Distributor and
Representative  Agreements,  both nationally and internationally and the product
is  distributed  through  numerous  independent,  chain drug,  food and discount
stores throughout the United States.

The  Company  continues  to  use  the  resources  of  independent  national  and
international  brokers complementing its own in-house personnel to represent the
Company's  over-the-counter  products,  thereby saving capital and other ongoing
expenditures that would otherwise be incurred.

ETHICAL PHARMACEUTICAL PRODUCTS

Pharma's current activity is the development of  naturally-derived  prescription
drugs with the goal to improve  the  quality of life and health of those in need
through scientific research and development. Research and development will focus
on the identification,  isolation and direct use of active medicinal substances.
One aspect of Pharma's research will focus on the combination of isolated active
constituents and whole plant  components.  The search for new natural sources of
medicinal  substances  will  focus not only on world  plants,  fungi,  and other
natural substances, but an intense investigation into traditional medicinals and
historic therapeutics.


                                       -5-


Pharma is currently  undergoing research and development  activity in compliance
with regulatory requirements. During the course of its research and development,
certain  formulas  have led to three  patents and several  patent  applications,
which the Patent Office of the United States  Commerce  Department has confirmed
the assignment to the Company.  The Company,  through Pharma,  is at the initial
stages of what may be a lengthy  process to  develop  these  patents  and patent
applications into commercial products.

The  pre-clinical  development,   clinical  trials,  product  manufacturing  and
marketing  of Pharma's  potential  new products are subject to federal and state
regulation in the United States and other  countries.  Obtaining FDA  regulatory
approval for these pharmaceutical products can require substantial resources and
take several years.  The length of this process depends on the type,  complexity
and novelty of the product and the nature of the disease or other indications to
be  treated.  If the  Company  cannot  obtain  regulatory  approval of these new
products in a timely  manner or if the patents are not granted or if the patents
are subsequently challenged,  these possible events could have a material effect
on the business  and  financial  condition  of the Company.  The strength of the
Company's patent position may be important to its long-term  success.  There can
be no assurance  that these  patents and patent  applications  will  effectively
protect the Company's products from duplication by others.

In April 2002, the Company initiated a Phase II proof of concept study in France
for treatment of diabetic neuropathy,  which was concluded in 2003. It indicated
that  subjects  using  this  formulation  had  67% of  their  symptoms  improve,
suggesting   efficacy.   Because  the  Company's   formulation   for  relief  of
diabetes-related pain is a topical treatment and its ingredients are GRAS listed
(Generally  Regarded As Safe) as identified in the Code of Federal  Regulations,
FDA  approval  could  potentially  be  obtained  earlier  than what is  normally
required in the FDA process.

In July  2002,  the  Company  announced  the  commencement  of  testing on a new
formulation  being  developed  by the  Company  to  relieve  Sialorrhea  (excess
secretions of the salivary glands,  causing drooling) in patients suffering from
diseases including  Amyotrophic Lateral Sclerosis (ALS),  otherwise known as Lou
Gehrig's Disease, Cerebral Palsy, Parkinson's Disease, and Muscular Dystrophy.

In September 2003, the Company announced its intention to file for permission to
study its  patent  pending  potential  treatment  for  psoriasis  and other skin
disorders.  Continued  testing  will  therefore  have to be  conducted  under an
Investigational  New  Drug  (IND)  application  following  positive  preliminary
results.

In December 2003, the Company  announced  positive test results of a preliminary
independent in vitro study  indicating  that a Quigley test compound  previously
tested on the Influenza virus showed  "significant  virucidal activity against a
strain of the Severe Acute Respiratory Syndrome (SARS) virus."

HEALTH AND WELLNESS PRODUCTS

Darius,  through  Innerlight  Inc.,  its wholly  owned  subsidiary,  is a direct
selling company  specializing in the development and distribution of proprietary
health  and  wellness  products  primarily  within the  United  States  with the
commencement  of  international  business  activity during the second quarter of
2003.  The  Company   develops  and  markets  products  that  are  suitable  for
distribution within a direct selling business environment. The products marketed
and sold by Darius are herbal  vitamins  and dietary  supplements  for the human
condition.

Within the framework of a direct selling business environment,  Darius sells its
products through a network of independent representatives, who are not employees
of Darius.  These purchases by the independent  representatives  may be used for
personal   consumption  or  used  for  resale  to  consumers.   The  independent
representatives receive compensation for sales achieved by means of a commission
structure  or  compensation  plan  based on their  product  sales  and  those of
personnel  within their down-line  independent  representative  network.  As the
independent  representatives  pay for product by credit card for shipments made,
the accounts receivable balances at any time are negligible.

The continued  success of this segment is dependent upon,  amongst other things,
the Company's ability:

            o     To maintain existing  independent  representatives and recruit
                  additional     successful     independent     representatives.
                  Additionally,  the loss of key high-level  distributors  could
                  negatively impact future growth and revenues;

            o     To continue to develop and make  available  new and  desirable
                  products at an acceptable cost;

            o     To maintain  safe and reliable  multiple-location  sources for
                  product and materials;


                                       -6-


            o     To  maintain  a  reliable  information  technology  system and
                  internet  capability.  The  Company has  expended  significant
                  resource on systems enhancements in the past and will continue
                  to do so to ensure prompt customer  response  times,  business
                  continuity   and   reliable   reporting   capabilities.    Any
                  interruption  to computer  systems  for an extended  period of
                  time could be harmful to the business;

            o     To execute  conformity with various  federal,  state and local
                  regulatory  agencies both within the United States and abroad.
                  With the commencement of international business,  difficulties
                  with foreign regulatory  requirements could have a significant
                  negative   impact  on  future   growth.   Any  inquiries  from
                  government authorities relating to our business and compliance
                  with laws and regulations could be harmful to the Company;

            o     To compete  with larger more  mature  organizations  operating
                  within the same market and to remain  competitive  in terms of
                  product relevance and business opportunity;

            o     To successfully  implement  methods for progressing the direct
                  selling philosophy internationally; and

            o     To plan strategically for general economic conditions.

Any or all of the above risks could result in significant reductions in revenues
and profitability of the Health and Wellness segment.

PATENTS, TRADEMARKS, ROYALTY AND COMMISSION AGREEMENTS

The Company  currently owns no patents for cold-remedy  products.  However,  the
Company has been assigned patent  applications  which are hereinafter  discussed
and has been  granted  an  exclusive  agreement  for  worldwide  representation,
manufacturing,  marketing and  distribution  rights to a zinc gluconate  glycine
lozenge formulation, which are patented as follows:

United States:    No. 4 684 528 (August 4, 1987)              Sweden: No. 0 183 840 (March 2, 1994)
                  No. 4 758 439 (July 19, 1988)               Canada: No. 1 243 952 (November 1, 1988)
                  Germany: No. 3,587,766 (March 2, 1994)      Great Britain: No. 2 179 536 (December 21, 1988)
                  Japan: Pending                              France & Italy: No. EP 0 183 840 B1 (March 2, 1994)

The following patents have been assigned to the Company in relation to Pharma:

United States:    No. 6 555 573 B2 (April 29, 2003)
                  No. 6 592 896 B2 (July 15, 2003)
                  No. 6 596 313 B2 (July 22, 2003)

In 1996, the Company also acquired an exclusive license for a United States ZINC
GLUCONATE  USE PATENT NUMBER RI 33,465 from the patent  holder.  This use patent
gives the Company  exclusive  rights to both the use and formulation  patents on
zinc  gluconate  for  reducing  the  duration  and  severity  of the common cold
symptoms.  This patent and exclusive  license expired in March 2002. The Company
does not anticipate  any material  impact on the financial  statements  from the
expiration of the patent.

The  Cold-Eeze(R)  product  is  manufactured  for  the  Company  by  a  contract
manufacturer  and  marketed  by the  Company in  accordance  with the terms of a
licensing  agreement  (between the Company and the  developer).  The contract is
assignable by the Company with the developer's consent.  Throughout the duration
of the  agreement,  the  developer is to receive a three percent (3%) royalty on
sales  collected,  less  certain  deductions.  A separate  consulting  agreement
between the parties referred to directly above was similarly entered into on May
4, 1992,  whereby the  developer is to receive a  consulting  fee of two percent
(2%) on sales collected, less certain deductions, for consulting services to the
Company with respect to such product.

Pursuant  to the  License  Agreement  entered  into  between the Company and the
patent  holder,  which expired in March 2002, the Company has paid a royalty fee
to the patent  holder of three  percent  (3%) on sales  collected,  less certain
deductions.

During 1997,  the Company  obtained a trademark for the major  components of its
lozenge,  ZIGG(TM) (denoting zinc gluconate glycine),  to set Cold-Eeze(R) apart
from the imitations proliferating the marketplace.


                                       -7-


An  agreement  between the Company and its  founders was entered into on June 1,
1995.  The  founders,   both  officers  and  stockholders  of  the  Company,  in
consideration of the acquisition of the Cold-Eeze(R)  cold therapy product,  are
to receive a total  commission of five percent (5%),  on sales  collected,  less
certain deductions until the termination of this agreement on May 31, 2005.

In August 2003,  the Company  entered into a licensing  agreement  with a patent
holder  relating to utilizing a nasal spray product in the treatment of symptoms
of the common  cold.  The  Company  has  agreed to pay the  patent  holder a two
percent royalty on net sales of nasal spray products,  less certain  deductions,
throughout the term of this agreement, expiring no later than April 2014.

During 2003 the  following  patents were granted to the Company  relating to the
areas of focus of the Ethical Pharmacutical segment:

      o     A Patent (No. 6,555,573 B2) entitled "Method and Composition for the
            Topical  Treatment  of  Diabetic  Neuropathy."  The  patent  extends
            through December 21, 2020.

      o     A Patent (No.  6,592,896  B2) entitled  "Medicinal  Composition  and
            Method  of  Using  It"  (for   Treatment  of  Sialorrhea  and  other
            Disorders)  for  a  product  to  relieve  sialorrhea  (drooling)  in
            patients   suffering  from  Amyotrophic   Lateral  Sclerosis  (ALS),
            otherwise known as Lou Gehrig's Disease.  The patent extends through
            August 6, 2021.

      o     A Patent (No.  6,596,313 B2) entitled  "Nutritional  Supplement  and
            Method of Using It" for a product to relieve  sialorrhea  (drooling)
            in patients  suffering from  Amyotrophic  Lateral  Sclerosis  (ALS),
            otherwise known as Lou Gehrig's Disease.  The patent extends through
            April 15, 2022.

PRODUCT DISTRIBUTION AND CUSTOMERS

The Company has several Broker, Distributor and Representative Agreements,  both
nationally and internationally,  which provide for commission compensation based
on sales performance.

The Cold-Eeze(R)  products are distributed through numerous food, chain drug and
mass merchandisers  throughout the United States,  including  Walgreens,  Ahold,
Albertsons,  CVS, RiteAid,  Publix,  Eckerd Drug Company,  B.J's Wholesale Club,
Inc., Sam's Club, Winn-Dixie Stores, Inc., Wal-Mart, Target, The Kroger Company,
Safeway Inc., Costco Wholesale,  Kmart Corporation,  and wholesale  distributors
including,   AmerisourceBergen,   Cardinal   Distribution  and  McKesson  Supply
Solutions.

The  Company is not  dependent  on any  single  customer  as the broad  range of
customers includes many large wholesalers, mass merchandisers,  and multi-outlet
pharmacy  chains,  five of which account for a  significant  percentage of sales
volume. The top five customers of the Company represent 23%, 23%, and 35% of its
continuing  consolidated  gross  revenues for the years ended December 31, 2003,
2002 and 2001, respectively.

Darius is a direct selling  organization  specializing in proprietary health and
wellness  products  and the  introduction  of new  products  to the  marketplace
through a network of independent distributors. This method of distribution is in
contrast to traditional  distribution  channels using independent and chain drug
and  discount  stores  as  utilized  by  the  Company  in the  promotion  of the
cold-remedy products.

Pharma  currently has no sales since it is undergoing  research and  development
activity in compliance with regulatory requirements and is at the initial stages
of what may be a lengthy process to develop commercial products.

RESEARCH AND DEVELOPMENT

The Company's  research and  development  costs for the years ended December 31,
2003, 2002 and 2001 were $3,365,698,  $2,663,291, and $1,331,639,  respectively.
Future research and development expenditures are anticipated in order to develop
extensions  of the  Cold-Eeze(R)  product,  including  potential  unrelated  new
products in the consumer health care industry,  that are primarily  supported by
clinical studies,  for efficacious  long-term  products that can be coupled with
possible line extension  derivatives for a family of products.  Clinical studies
and testing are anticipated in connection  with Pharma,  such as the formulation
of products for diabetic use, radiation dermatitis and sialorrhea and


                                       -8-


other disorders.  Principally, the increase of research and development costs in
2003 was due to expenses  incurred as part of the product research costs related
to Pharma and study costs  associated  with  Cold-Eeze(R).  Pharma is  currently
involved in research activity following patent applications that the Company has
acquired and research and development costs, relating to potential products, are
expected to increase  significantly  over time as product  research  and testing
continues.

REGULATORY MATTERS

The business of the Company is subject to federal and state laws and regulations
adopted  for the  health  and  safety of users of the  Company's  products.  The
Company's  Cold-Eeze(R)  product is a  homeopathic  remedy,  which is subject to
regulation by various federal,  state and local agencies,  including the FDA and
the Homeopathic Pharmacopoeia of the United States. These regulatory authorities
have broad  powers,  and the Company is subject to  regulatory  and  legislative
changes that can affect the  economics  of the industry by requiring  changes in
operating  practices  or by  influencing  the  demand  for,  and the  costs  of,
providing  its products.  Management  believes that the Company is in compliance
with all such laws,  regulations and standards currently in effect including the
Food,  Drug  and  Cosmetics  Act  of  1938  and  the  Homeopathic  Pharmacopoeia
Regulatory  Service.  Although it is possible that future  results of operations
could be  materially  affected  by the future  costs of  compliance,  management
believes  that the future costs will not have a material  adverse  effect on the
Company's financial position or competitive position.

The  pre-clinical  development,   clinical  trials,  product  manufacturing  and
marketing  of Pharma's  potential  new products are subject to federal and state
regulation in the United States and other  countries.  Obtaining FDA  regulatory
approval for these pharmaceutical products can require substantial resources and
take several years.  The length of this process depends on the type,  complexity
and novelty of the product and the nature of the disease or other indications to
be  treated.  If the  Company  cannot  obtain  regulatory  approval of these new
products in a timely  manner or if the patents are not granted or if the patents
are  subsequently  challenged,  these possible  events could all have a material
effect on the business and financial  condition of the Company.  The strength of
the Company's patent position may be important to its long-term  success.  There
can be no assurance that these patents and patent  applications will effectively
protect the Company's products from duplication by others.

COMPETITION

The Company competes with other suppliers of cold-remedy and health and wellness
products.   These  suppliers  range  widely  in  size.  Some  of  the  Company's
competitors  have  significantly  greater  financial,   technical  or  marketing
resources than the Company.  Management believes that its Cold-Eeze(R)  product,
which has been  clinically  proven in two  double-blind  studies  to reduce  the
severity  and  duration  of the  common  cold  symptoms,  offers  a  significant
advantage  over  many of its  competitors  in the  over-the-counter  cold-remedy
market.  Management further believes that Darius' direct marketing  distribution
methods offer a significant advantage over many of its competitors.  The Company
believes that its ability to compete  depends on a number of factors,  including
price,  product  quality,  availability  and  reliability,  credit  terms,  name
recognition, delivery time and post-sale service and support.

EMPLOYEES

At December 31, 2003 the Company employed 63 full-time persons, primarily all of
whom were involved in an executive,  marketing or administrative  capacity. None
of the Company's employees are covered by a collective  bargaining  agreement or
is a member of a union.

SUPPLIERS

The  Company  currently  uses  separate  suppliers  to produce  Cold-Eeze(R)  in
lozenge,  sugar-free  tablet and nasal  spray  form.  The  Cold-Eeze(R)  lozenge
product is  manufactured  by a contract  manufacturer,  a significant  amount of
whose  revenues are from the Company.  Should these  relationships  terminate or
discontinue  for any reason,  the  Company has  formulated  a  contingency  plan
necessary in order to prevent such discontinuance from materially  affecting the
Company's operations.  Any such termination may, however,  result in a temporary
delay in production until the replacement facility is able to meet the Company's
production requirements.

Raw materials used in the production of the  cold-remedy  products are available
from numerous sources.  Currently,  they are being procured from a single vendor
in order to secure purchasing economies. In a situation where this one vendor is
not able to supply the contract manufacturer with the ingredients, other sources
have been  identified.  Any situation where the vendor is not able to supply the
contract  manufacturer  with the  ingredients may result in a temporary delay in
production  until  replacement  supplies  are  obtained  to meet  the  Company's
production requirements.


                                       -9-


Darius'  products for resale are sourced from  several  suppliers.  In the event
that such  sources were no longer in a position to supply  Darius with  product,
other vendors have been identified as reliable alternatives with minimal adverse
loss of business.

ITEM 2. DESCRIPTION OF PROPERTY

The corporate office of The Quigley  Corporation is located at 621 Shady Retreat
Road,  Doylestown,  Pennsylvania.  This property,  with an area of approximately
13,000 square feet, was purchased in November 1998 and refurbished  during 1999.
The Company occupies  warehouse space in Las Vegas,  Nevada at a current monthly
cost of $2,396. This Nevada location has a three-year lease that expires in July
2006.  In  addition  to  storage  facilities  at  the  contract   manufacturers'
locations,  the Company also stores product in a number of additional warehouses
in Pennsylvania  with storage charges based upon the quantities of product being
stored.

The Darius business in Utah is located at 867 East 2260 South, Provo, Utah, with
an area of  approximately  24,700 square feet. The current monthly lease cost of
this  office  and  warehouse  space is $10,713  with the leases  that are set to
expire in September 2005 and July 2007,  respectively.  The Company expects that
these leases will be renewed or that alternative spaces will be obtained.

The Company believes that its existing facilities are adequate at this time.

ITEM 3. LEGAL PROCEEDINGS

                                TESAURO AND ELEY

In September,  2000, the Company was sued by two individuals  (Jason Tesauro and
Elizabeth Eley, both residents of Georgia), on behalf of a "nationwide class" of
"similarly  situated  individuals," in the Court of Common Pleas of Philadelphia
County,  Pennsylvania.  The  Complaint  alleges  that the  Plaintiffs  purchased
certain Cold-Eeze(R)  products between August,  1996, and November,  1999, based
upon  cable  television,  radio  and  internet  advertisements  which  allegedly
misrepresented  the  qualities  and  benefits  of the  Company's  products.  The
Complaint   requests  an  unspecified   amount  of  damages  for  violations  of
Pennsylvania's   consumer   protection   law,  breach  of  warranty  and  unjust
enrichment, as well as a judicial determination that the action be maintained as
a class action.

In October,  2000,  the Company  filed  Preliminary  Objections to the Complaint
seeking dismissal of the action.  The Court sustained certain objections thereby
narrowing  Plaintiffs'  Complaint.  In May, 2001,  Plaintiffs  filed a Motion to
Certify the Alleged Class.  The Company opposed the Motion.  In November,  2001,
the Court  held a hearing on  Plaintiffs'  Motion  for Class  Certification.  In
January,  2002,  the Court  denied in part and  granted in part the  Plaintiffs'
Motion.  The  Court  denied  Plaintiffs'  Motion  to  Certify  a Class  based on
Plaintiffs' claim under the Pennsylvania  Consumer Protection Law; however,  the
Court  certified  the class based on  Plaintiffs'  breach of warranty and unjust
enrichment claims.

Discovery  has been  completed  and trial has been  scheduled to commence in May
2004.  The Company is  vigorously  defending  this lawsuit and believes that the
action lacks merit.  Based upon the information the Company has at this time, it
believes the action will not have a material impact to the Company.  However, at
this time no prediction as to the outcome can be made.

                               GOLDBLUM AND WAYNE

A Special Meeting of the Quigley  stockholders  was held on October 15, 1999, at
which a majority of the shares  entitled  to vote  adopted a  Corrective  Action
Proposal  (initially  reported in the Company's Form 10-Q for the quarter ending
June 30, 1999) to ratify actions previously taken by the Company relating to the
1990 1 for 2.74 reverse  split,  the 1995 1 for 10 reverse  split (the  "Reverse
Splits") and the 1997 1 for 2 forward split (the "Forward  Split").  Pursuant to
the October 15, 1999 Special  Meeting,  the Company  authorized  the filing of a
declaratory  judgment  action in Nevada to determine  the  effectiveness  of the
Corrective Action.

In August 2000,  the District  Court of Clark County,  Nevada,  held that it had
jurisdiction to decide the Company's declaratory judgment action filed in April,
2000,  against two putative  shareholders  (Thomas Goldblum and Alan Wayne),  in
which the  Company  seeks a  judicial  declaration  that,  based on  stockholder
approval of the Corrective Action Proposal, the Reverse Splits and Forward Split
satisfy  and/or  comply with Nevada law and that the  capitalization  of Quigley
evidenced by the issued and outstanding  shares of common stock and common stock
warrants is as reflected on Quigley's  stock  transfer  ledger on September  10,
1999, the record date of the Special Meeting. The District Court of Clark County
held a  hearing  on this  matter  on March  19,  2002 and  ruled in favor of The
Quigley Corporation. A final judgment has been entered of record by the Court on
June 21, 2002.  The period for appeal of this order to the Nevada  Supreme Court
has expired.


                                      -10-


An underlying  claim filed by Goldblum and Wayne in the Court of Common Pleas of
Montgomery  County,  Pennsylvania on March 17, 1996 alleging that the plaintiffs
became owners of 500,000  shares each of the Company's  common stock in or about
1990 and  requested  damages in excess of $100,000  for breach of  contract  and
conversion.

The Company believed that the plaintiffs'  claims were without merit,  barred by
the applicable  statutes of  limitations,  and that the plaintiffs  were, in any
event, limited to claims for approximately 36,000 shares.

The Company vigorously  defended this lawsuit through trial during January 2004,
when a jury  returned a unanimous  verdict in favor of the Company.  Thereafter,
the plaintiffs  filed a motion for  post-trial  relief as a first step toward an
appeal, which the Company regards as without merit and will oppose. Although the
Company  regards any effort by  plaintiffs  to pursue an appeal as lacking merit
and based upon the  information  the Company has at this time,  it believes  the
action will not have a material impact to the Company.  However, at this time no
prediction as to the outcome of this appeal can be made.

                          LITIGATION - FORMER EMPLOYEE

On April 12, 2002,  the Company  commenced a complaint in Equity in the Court of
Common  Pleas of Bucks  County,  PA  against  the  former  President  of  Darius
International Inc., its wholly owned subsidiary,  following  termination of such
President.  The allegations in the complaint include, but are not limited to, an
alleged  breach of fiduciary  duty owed to the  Company.  The Company is seeking
both  injunctive  and monetary  relief.  On or about May 1, 2002,  the defendant
filed a counterclaim  requesting  that the Court declare him the lawful owner of
55,000 stock options,  unspecified  damages  relating to an alleged breach of an
oral contract and for  commissions  allegedly  owed. In addition,  the Defendant
requests  the return of  certain  intellectual  property  used to  commence  and
continue Darius' operations.

The  Corporation  believes  Defendant's  claims are without merit, is vigorously
defending the  counterclaims  and is  prosecuting  its action on its  complaint.
Based upon the  information the Company has at this time, it believes the action
will not  have a  material  impact  to the  Company.  However,  at this  time no
prediction as to the outcome can be made.

                             TERMINATED PROCEEDINGS

                        MIKE FORAN VS. INNERLIGHT, INC.,
                         DARIUS INTERNATIONAL, INC., AND
                             THE QUIGLEY CORPORATION

On August 1, 2003, an action was filed with the American Arbitration Association
by Mike Foran  against  Innerlight  Inc.,  a wholly owned  subsidiary  of Darius
International  Inc., which is a wholly owned subsidiary of the Company.  After a
hearing  before the  United  States  District  Court for the  District  of Utah,
Central Division,  Foran withdrew his complaint against The Quigley  Corporation
and the matter was remanded to arbitration.  Discovery began on December 1, 2003
and was  completed  on  December  22,  2003.  Based on the  discovery  of all of
defendants'  documents  and  defendants'   depositions  and  after  interviewing
Innerlight  Inc.'s  witnesses,  the Company  upon advice of counsel  settled the
action for $290,000 and reinstated Foran as an independent representative.

Negotiations  leading to  settlement  were  completed by December 31, 2003 and a
Settlement  Agreement  was entered  effective  January 18, 2004.  As part of the
Settlement  Agreement,  Mr. Foran completely released  Innerlight,  Inc. and The
Quigley  Corporation from any claim arising out of the action  instituted by him
on August 1, 2003 and also any  claim he may have  asserted  against  Innerlight
Inc. or The Quigley Corporation.

                                INTERVENTION INC.

An action was filed by Intervention, Inc. on July 2, 2002 in Contra Costa County
Superior  Court  under the  California  Unfair  Competition  Law,  Business  and
Professions Code, Section 17200. The Complaint claims that COLD-EEZE(R) does not
contain  ionic zinc and therefore  does not have the unique  quality the Company
asserts for it. The  Complaint  purports to attack The  Cleveland  Clinic  Study
titled ZINC  GLUCONATE  LOZENGES FOR TREATING THE COMMON COLD and the  Dartmouth
Study,  ZINC AND THE COMMON COLD, A CONTROLLED  CLINICAL  STUDY.  The  plaintiff
claims that the Dartmouth Study is not double-blind  and is not randomized.  The
plaintiff  also claims that The  Cleveland  Clinic Study is untrue and deceptive
because it did not conclude that patients "starting  treatments" with zinc had a
42%  reduction  in  duration  of the  common  cold and,  also,  because  the 42%
reduction in common cold duration is not a reference to average of cold duration
but rather is a reference to the reduction in median  duration.  There is also a
claim by the  plaintiff  that there is an implied  claim that the results in the
studies have been confirmed by repetition which plaintiff contests.


                                      -11-


On the 3rd day of July, 2003, the Contra Costa County Superior Court upon Motion
of The  Quigley  Corporation  issued a Summary  Judgment in favor of The Quigley
Corporation.  On October  24,  2003,  Intervention  Inc.  filed an appeal to the
California  Court of Appeals  from the Summary  Judgment  issued in favor of The
Quigley Corporation. In March 2004, the appeal was withdrawn, with prejudice.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

                                     PART II

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's Common Stock,  $.0005 par value, is currently traded on the NASDAQ
National  Market  under the trading  symbol  "QGLY".  The price set forth in the
following table  represents the high and low bid prices for the Company's common
stock.

                                                  Common Stock
                                                  ------------
                                          2003                       2002
                                    ----------------         -------------------
      Quarter Ended                  High       Low           High          Low
      -------------                  ----       ---           ----          ---

      March 31                       $7.76     $4.71         $7.20         $2.03
      June 30                        $8.22     $5.39         $8.82         $5.40
      September 30                  $10.51     $6.75         $8.00         $3.05
      December 31                   $11.12     $7.32         $7.05         $2.40

Such quotations  reflect  inter-dealer  prices,  without  mark-up,  mark-down or
commission and may not represent actual transactions.

The  Company's   securities  are  traded  on  the  NASDAQ  National  Market  and
consequently  stock  prices are  available  daily as  generated  by the National
Market established quotation system.

HOLDERS

As of December 31, 2003, there were  approximately  360 holders of record of the
Company's  Common Stock,  including  brokerage firms,  clearing  houses,  and/or
depository firms holding the Company's  securities for their respective clients.
The exact number of beneficial  owners of the Company's  securities is not known
but exceeds 400.

DIVIDENDS

The Company has not declared,  nor paid, any cash dividends on its Common Stock.
At this time the Company intends to retain its earnings to finance future growth
and maintain liquidity.


                                      -12-


WARRANTS AND OPTIONS

In addition to the Company's outstanding Common Stock, there are, as of December
31, 2003, issued and outstanding Common Stock Purchase Warrants and Options that
are exercisable at the price-per-share  stated and expire on the date indicated,
as follows:

      Description          Number        Exercise Price         Expiration Date
      -----------          ------        --------------         ---------------
      Warrants            250,000            $8.5000           March 7, 2004
      Warrants            250,000            $9.5000           March 7, 2004
      Warrants            250,000           $11.5000           March 7, 2004
      CLASS "E"           850,000            $1.7500           June 30, 2006
      CLASS "F"           225,000            $2.5000           November 4, 2006
      CLASS "G"           585,000           $10.0000           May 5, 2007
      Option Plan         396,500            $9.6800           December 1, 2007
      Option Plan         331,000            $5.1250           April 6, 2009
      Option Plan         263,000            $0.8125           December 20, 2010
      Option Plan         324,500            $1.2600           December 10, 2011
      Option Plan         350,000            $5.1900           July 30, 2012
      Option Plan         102,000            $5.4900           December 17, 2012
      Option Plan         424,000            $8.1100           October 29, 2013

At December 31, 2003,  there were 4,601,000  unexercised  and vested options and
warrants of the Company's stock available for exercise.

SECURITIES AUTHORIZED UNDER EQUITY COMPENSATION

The following  table sets forth certain  information  regarding stock option and
warrant grants made to employees, directors and consultants:

       SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

                                                                           Weighted
                                                         Number of          Average          Number of Securities
                                                     Securities to be      Exercise       Remaining Available for
                                                        Issued Upon        Price of        Future Issuance Under
                                                        Exercise of       Outstanding     Equity Compensation Plans
                  Plan Category                         Outstanding        Options &        (Excluding Securities
                                                    Options & Warrants      Warrants        Reflected in Column A)
                                                            (A)               (B)                   ( C )
-------------------------------------------------------------------------------------------------------------------

Equity Plans Approved by Security Holders (1)            2,191,000           $5.46                  700,000

Equity Plans Not Approved by Security Holders (2)        2,410,000           $6.34                     --

Total                                                    4,601,000           $5.92                  700,000

(1)   An incentive  stock option plan was  instituted in 1997,  (the "1997 Stock
      Option Plan") and approved by the  stockholders in 1998.  Options pursuant
      to the 1997 Stock  Option Plan have been granted to  directors,  executive
      officers, and employees.
(2)   Other  grants  of  warrants  are  specific  and not part of a plan.  These
      specific grants were to executive officers,  employees and consultants for
      services.


                                      -13-


ITEM 6. SELECTED FINANCIAL DATA

The following  table sets forth the selected  financial data of the Company for,
and at the end of the years ended December 31, 2003, 2002, 2001, 2000 and 1999.

The data  presented  below  should  be read in  conjunction  with  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
the Company's financial statements and notes thereto appearing elsewhere herein.

(Amounts in thousands, except                  Year Ended    Year Ended      Year Ended    Year Ended      Year Ended
Per share data)                                December 31,  December 31,    December 31,  December 31,    December 31,
                                                   2003          2002            2001          2000            1999
                                               ------------------------------------------------------------------------
STATEMENT OF INCOME DATA:
Net Sales                                        $41,499        $29,272        $21,226       $15,527         $21,574
Total Revenue                                     41,499         29,421         22,772        15,527          21,574
Gross Profit                                      20,011         12,212         12,551         9,411          13,240
Income (Loss) -  continuing operations               729         (5,132)           934        (5,059)         (4,204)
Loss - discontinued operations (1)                   (54)        (1,322)          (718)         (137)             --
Net Income (Loss)                                    675         (6,454)           216        (5,196)         (4,204)

Basic earnings (Loss) per share:
       Continuing operations                       $0.06         ($0.47)         $0.09        ($0.48)         ($0.37)
       Discontinued operations                        --         ($0.12)        ($0.07)       ($0.01)             --
       Net income (Loss)                           $0.06         ($0.59)         $0.02        ($0.49)         ($0.37)
Diluted earnings (Loss) per share:
       Continuing operations                       $0.05         ($0.47)         $0.09        ($0.48)         ($0.37)
       Discontinued operations                        --         ($0.12)        ($0.07)       ($0.01)             --
       Net income (Loss)                           $0.05         ($0.59)         $0.02        ($0.49)         ($0.37)
Weighted average shares outstanding:

       Basic                                      11,467         10,894         10,675        10,551          11,352
       Diluted                                    14,910         10,894         10,751        10,551          11,352

                                                  As of          As of          As of         As of           As of
                                               December 31,   December 31,   December 31,  December 31,    December 31,
                                                   2003           2002           2001          2000            1999
                                                              (Restated -
                                                              Note 15) (2)
                                               ------------------------------------------------------------------------
BALANCE SHEET DATA:
Working capital                                  $18,257        $16,662        $18,626       $18,622         $23,621
Total assets                                      26,270         24,935         24,756        26,056          33,271
Stockholders' equity                             $20,787        $19,121        $21,200       $20,971         $26,216

(1) In December 2002,  the Board of Directors of the Company  approved a plan to
sell Caribbean Pacific Natural Products, Inc. ("CPNP"). On January 22, 2003, the
Board of Directors of the Company completed the sale of the Company's 60% equity
interest in CPNP to Suncoast  Naturals,  Inc.  The sale of this segment has been
treated  as  discontinued   operations  and  all  periods  presented  have  been
reclassified.

(2) As  further  discussed  in Note  15,  the  Company  has  restated  its  2002
consolidated  financial  statements in order to properly  reflect the accounting
for certain warrants issued in 2002.


                                      -14-


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

The  Quigley   Corporation,   (the  "Company"),   headquartered  in  Doylestown,
Pennsylvania,  is a leading  marketer and distributor of a diversified  range of
health and homeopathic products.

The Company's  business  interests  comprise three segments,  being cold-remedy,
health and wellness and ethical pharmaceutical.

The Cold-Eeze(R)  product continues to be the primary product of the cold-remedy
segment and is available in lozenge, sugar-free tablet and nasal spray form. The
Cold-Eeze(R)  Nasal Spray and the  Kidz-Eeze(TM)  Sore Throat products were both
launched in the third quarter of 2003 in  preparation  for the cold season.  The
efficacy of the Cold-Eeze(R)  product was established  following the publication
of the second  double blind study in July 1996. A 2002 study also found that the
use of Cold-Eeze(R) to treat a cold statistically reduced the use of antibiotics
for  respiratory  illnesses by 92% when  Cold-Eeze(R) is administered as a first
line treatment  approach to the common cold. In May 2003, the Company  announced
the findings of a prospective  study,  conducted at the Heritage School facility
in  Provo,  Utah,  in  which  178  children  ages  12 to  18  years  were  given
Cold-Eeze(R)  lozenges both symptomatically and prophylactically from October 5,
2001 to May 30, 2002.  The study found a 54%  reduction  in the most  frequently
observed cold duration.  Those subjects not receiving  treatment most frequently
experienced  symptom duration at 11 days compared with 5 days when lozenges were
administered, a reduction of 6 days.

Cold-Eeze(R) is distributed through numerous  independent,  chain drug, food and
discount  stores  throughout  the United  States.  Net sales of the  cold-remedy
segment  increased  46% in 2003 over the prior year,  resulting  in net sales in
2003 of $20,474,969  compared to $14,050,967 in 2002. This increase reflects the
strategic  decision by  management  to provide  improved  support to the segment
through increased media advertising and co-operative advertising promotions with
our customer  base.  Additionally,  revenues  were  assisted by media  attention
afforded to potential cold and influenza outbreaks that were expected during the
2003/2004 cold season.

The  Company  continues  to  use  the  resources  of  independent  national  and
international brokers to represent the Company's  Cold-Eeze(R)  products,  which
provides cost efficiencies that benefit the Company.

During  2003,  the  Company  continued  the process of the  registration  of the
Cold-Eeze(R)  products  in the United  Kingdom as a pharmacy  drug and  incurred
approximately $400,000 in related expenses.

Darius, through Innerlight Inc., is a direct selling company specializing in the
development  and  distribution  of  proprietary  health  and  wellness  products
primarily  within the  United  States  with the  commencement  of  international
business activity during the second quarter of 2003. Net sales of the health and
wellness  segment in 2003 were  $21,024,194 an increase of 38% over the 2002 net
sales of $15,220,813. The growth of this segment in 2003 was attributable to the
recruitment of increasing  numbers of active independent  representatives  along
with the Company commencing  international business during the second quarter of
2003.

The establishment of an ethical  pharmaceutical  subsidiary,  Pharma, may enable
the Company to diversify  into the  prescription  drug market and to ensure safe
and effective  distribution of these important  potential new products currently
under  development.  During the course of 2003,  the Company was assigned  three
patents and filed three patent  applications,  two with the Patent Office of the
United  States  Commerce  Department  and one  within  the  European  Community.
Research and development  costs relating to projects being  undertaken by Pharma
increased in 2003 over the prior year as a result of increased study activity in
various areas of interest.

Manufacturing  for all the Company's  products is done by outside  sources.  The
lozenge form of  Cold-Eeze(R)  is  manufactured  by a contract  manufacturer,  a
significant amount of whose revenues are from the Company,  with other forms and
products produced by different manufacturers.

Operating  expenses  during 2003  increased  over those of 2002 due to increased
advertising and increased  research and  development  costs related to the study
activities of Pharma.

Future revenues,  costs,  margins, and profits will continue to be influenced by
the Company's  ability to maintain its  manufacturing  availability and capacity
together with its marketing and  distribution  capabilities in order to continue
to


                                      -15-


compete on a national and international level.

In December 2002, the Board of Directors of the Company  approved a plan to sell
Caribbean  Pacific Natural  Products,  Inc.  ("CPNP").  On January 22, 2003, the
Board of Directors of the Company completed the sale of the Company's 60% equity
interest in CPNP to Suncoast Naturals,  Inc.  ("Suncoast").  In exchange for its
60% equity  interest in CPNP, the Company shall  receive:  (i) 750,000 shares of
Suncoast's  common stock,  which Suncoast has agreed,  at its cost and within 60
days from the closing,  to register  for public  resale  through an  appropriate
registration  statement  (this  registration  statement  has not  been  declared
effective by the Securities and Exchange  Commission) and (ii) 100,000 shares of
Suncoast's Series A Redeemable  Preferred Stock,  which bears interest at a rate
of 4.25% per annum and which is  redeemable  from time to time  after  March 31,
2003 in such  amounts  as is equal  to 50% of the free  cash  flow  reported  by
Suncoast in the immediately  preceding quarterly financial statements divided by
the redemption  price of $10.00 per share.  The Company owns 19.5% of Suncoast's
issued and outstanding  capital stock,  which investment is accounted for on the
cost basis method.

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

FIN 46R, CONSOLIDATION OF VARIABLE INTEREST ENTITIES -- AN INTERPRETATION OF ARB
51 (REVISED DECEMBER 2003)

In December, 2003 the Financial Accounting Standards Board (FASB or the "Board")
issued FASB  Interpretation  No. 46 (revised  December 2003),  CONSOLIDATION  OF
VARIABLE INTEREST ENTITIES (FIN 46R), to address certain  implementation issues.
FIN 46R varies  significantly from FASB Interpretation No. 46,  CONSOLIDATION OF
VARIABLE INTEREST  ENTITIES (FIN 46), which it supersedes.  FIN 46R requires the
application  of either FIN 46 or FIN 46R by  "Public  Entities"  to all  Special
Purpose  Entities  ("SPEs") at the end of the first interim or annual  reporting
period  ending after  December 15, 2003.  FIN 46R is  applicable to all non-SPEs
created prior to February 1, 2003 by Public Entities that are not small business
issuers at the end of the first interim or annual  reporting period ending after
March 15, 2004. The Company has determined that  Scandasystems,  a related party
(See note 14), may qualify as a variable  interest  entity and we may  initially
consolidate  Scandasystems beginning with our quarter ending March 31, 2004. Due
to the  fact  that the  company  has no  long-term  contractual  commitments  or
guarantees, our maximum exposure to loss is insignificant.

SFAS NO. 150, "ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS
OF BOTH LIABILITIES AND EQUITY." (SFAS NO. 150)

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of Both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  The provisions of SFAS No.
150 are effective for financial  instruments  entered into or modified after May
31, 2003,  and  otherwise is  effective  at the  beginning of the first  interim
period  beginning after June 15, 2003. The adoption of SFAS No. 150 did not have
an impact on its financial position or results of operations.

CRITICAL ACCOUNTING POLICIES

As   previously   described,   the  Company  is  engaged  in  the   development,
manufacturing,  and marketing of health and homeopathic  products that are being
offered  to the  general  public  and is  also  involved  in  the  research  and
development of potential prescription products.  Certain key accounting policies
that may affect the results of the Company are the timing of revenue recognition
and sales incentives (including coupons,  rebates,  co-operative advertising and
discounts);  the classification of advertising  expenses;  and the fact that all
research and  development  costs are  expensed as  incurred.  Notes to Financial
Statements,  Note 1,  Organization  and Business,  describes the Company's other
significant accounting policies.

REVENUE RECOGNITION

Cold-remedy  sales  are  recognized  at the time  ownership  and risk of loss is
transferred  to the  customer,  which is  primarily  the time  the  shipment  is
received by the customer.  In the case of the health and wellness  segment sales
are recognized at the time goods are shipped to the customer.  Sales returns and
allowances  are provided for in the period that the related  sales are recorded.
Provisions for these reserves are based on historical experience.

ADVERTISING

Advertising  costs  are  expensed  within  the  period  to  which  they  relate.
Advertising expense is made up of media advertising,  presented as part of sales
and marketing  expense;  co-operative  advertising,  which is accounted for as a
deduction from sales; and bonus product,  which is accounted for as part of cost
of sales. The level of advertising expense


                                      -16-


to be incurred is determined each period to coincide with management's sales and
marketing  strategies.  Advertising  costs incurred for the years ended December
31,  2003,   2002  and  2001  were   $5,483,465,   $4,794,955  and   $3,402,006,
respectively.  This  expense  item  increased  in 2003 due to  active  media and
in-market advertising necessary to promote and support the Cold-Eeze(R) product.
Included in prepaid  expenses and other current  assets was $68,000 and $236,875
at December 31, 2003 and December  31, 2002,  respectively,  relating to prepaid
advertising expenses.

RESEARCH AND DEVELOPMENT

Research and  development  costs are charged to operations in the year incurred.
Expenditures  for the  years  ended  December  31,  2003,  2002  and  2001  were
$3,365,698, $2,663,291, and $1,331,639, respectively.  Principally, research and
development  is part of the product  research  costs related to Pharma and study
costs  associated  with  Cold-Eeze(R).  Expenditure for 2003 also includes study
costs  relating to  Cold-EEZE(R)  Cold Remedy Nasal  Spray.  Pharma is currently
involved in research  activity that is expected to increase  significantly  over
time as product research and testing  progresses.  The Company is at the initial
stages  of  what  may be a  lengthy  process  to  develop  potential  commercial
prescription products.

RESULTS OF OPERATIONS

TWELVE MONTHS ENDED DECEMBER 31, 2003 COMPARED WITH SAME PERIOD 2002

The Company has restated its 2002 consolidated  financial  statements herein, in
order to properly  reflect the accounting for certain  warrants  issued in 2002.
See Note 15 to the Consolidated Financial Statements.

Revenues  from  continuing  operations  for 2003 were  $41,499,163  compared  to
$29,420,646 for 2002,  reflecting an increase of 41% in 2003.  Revenues for 2003
comprised  $20,474,969  relating  to  the  cold-remedy  segment,  primarily  the
Cold-Eeze(R)  product  and  $21,024,194  from the health and  wellness  segment,
compared to 2002 revenues of $14,199,833 and $15,220,813, by respective segment.
The 2002 cold-remedy  revenues included an amount of $148,866 as a result of the
settlement  of the  infringement  suit against Gel Tech,  LLC, the  developer of
Zicam(TM), and Gum Tech International,  Inc., its distributor. The 2003 increase
in the revenues of the  cold-remedy  segment may be attributable to management's
strategy in supporting  the  Cold-Eeze(R)  product in the  marketplace by way of
media  advertising and ongoing  co-operative  advertising  initiatives  with the
Company's  customer  base.  The segment may also have been  influenced  by media
attention to the possibility of increased cold and influenza  incidences  during
the  2003/2004   cold  season.   The  health  and  wellness   segment   reported
significantly  increased  revenues  in 2003 of  $5,803,380  over the prior year,
primarily due to the continued  recruitment by the Company of active independent
representatives  along with the Company entering the international market during
the second quarter of 2003.

Cost of sales from  continuing  operations for 2003 as a percentage of net sales
was 51.8%,  compared  to 58.8% for 2002.  The cost of sales  percentage  for the
cold-remedy  segment  was  reduced  in 2003 by 8.2%  due to  decreased  costs of
product bonus promotions and considerably  reduced royalty charges  attributable
to the nasal and throat pop products,  and also the 2002 amount included charges
for  inventory  obsolescence.  The cost of sales  percentage  for the health and
wellness segment decreased in 2003 by 5.2% largely  attributable to fluctuations
in the commission expense payable to the independent  representatives along with
charges in 2002 as a result of obsolete inventory on hand.

Selling,  marketing and administrative  expenses from continuing  operations for
2003 were $16,010,164  compared to $14,832,935 in 2002. The increase in 2003 was
primarily due to increased  media  advertising of $845,055  necessary to support
the  Cold-Eeze(R)  product along with increased costs associated with the health
and  wellness  segment  of  approximately  $2,161,000  primarily  related to the
generation of increased  revenues.  The 2002 expenses included a non-cash charge
of $2,100,000 for warrants  granted in connection with consulting  services with
no comparable charge in 2003.

Research and development costs from continuing  operations in 2003 and 2002 were
$3,365,698 and $2,663,291,  respectively.  Principally, the increase of research
and  development  in 2003  was due to  increased  expenses  associated  with the
ongoing research and clinical activity of Pharma in the amount of $642,983.

During 2003,  the  Company's  major  operating  expenses of salaries,  brokerage
commissions, promotion, advertising, and legal costs accounted for approximately
$11,328,608 (58%) of the total operating expenses of $19,375,862, an increase of
2% over the 2002 amount of $11,143,588. The selling, general and administrative
expenses  related to Darius for 2003 and 2002 were  $5,396,696  and  $3,235,793,
respectively.


                                      -17-


Revenues of CPNP  (discontinued  operations) for the twelve months periods ended
December  31, 2003 and 2002 were  $59,824,  and  $2,040,312,  respectively,  net
losses for the same periods were $54,349 and $1,322,355. The results of CPNP are
represented  as  discontinued  operations in the  Statements  of Operations  and
Balance Sheets.

Total assets of the Company at December 31, 2003 and 2002 were  $26,269,759  and
$24,934,956,   respectively.   Working   capital   increased  by  $1,595,405  to
$18,257,354  at December 31, 2003.  The primary  influences  on working  capital
during 2003 were: the decrease in cash balances,  increased  account  receivable
balances due to increased revenues,  reductions in inventory on hand as a result
of increased  revenues and management  control;  other current  liabilities  and
accrued  royalty and sales  commissions  both  increased  due to improved  sales
activity in 2003.

TWELVE MONTHS ENDED DECEMBER 31, 2002 COMPARED WITH SAME PERIOD 2001

Revenues  from  continuing  operations  for 2002 were  $29,420,646  compared  to
$22,772,214  for 2001,  reflecting an increase of 29%.  2002 revenues  comprised
$14,199,833  relating to the  Cold-Eeze(R)  product  (cold-remedy  segment)  and
$15,220,813 from Darius (health and wellness segment), compared to 2001 revenues
of $16,983,635  and $5,788,579,  by respective  segment.  The 2001  Cold-Eeze(R)
revenues  included an amount of $1,546,592 as a result of the  settlement of the
infringement  suit against Gel Tech,  LLC, the developer of  Zicam(TM),  and Gum
Tech International,  Inc., its distributor as compared to $148,866 in 2002. 2002
revenues  report a reduction  in  Cold-Eeze(R)  sales of  $2,783,802  due to the
compression of the  cold-remedy  category in general despite the increase in the
incidences  of the  common  cold.  In  addition,  the weak  economic  conditions
resulted in lower  carrying  amounts of inventory by our  customers  and reduced
order size and frequency. The health and wellness segment reported significantly
increased  revenues in 2002  primarily  due to strong  marketing  and  promotion
programs effected throughout 2002.

Cost of sales from  continuing  operations for 2002 as a percentage of net sales
was 58.8%, compared to 48.2% for 2001. The 2002 increase is primarily due to the
effects of the  significantly  increased  revenues  from the health and wellness
segment  whose cost of sales as a percentage  of sales were 71% and 67% for 2002
and 2001,  respectively,  reflecting this segment's lower profit margin compared
to that of Cold-Eeze(R) cold-remedy segment.

Selling,  marketing and administrative  expenses from continuing  operations for
2002 were $14,832,935  compared to $10,650,555 in 2001. The increase in 2002 was
primarily due to increased  advertising  of $1,392,952  necessary to support the
Cold-Eeze(R)  product and a non-cash  charge of  $2,100,000 in 2002 for warrants
granted in connection with consulting services.

Research and development costs from continuing  operations in 2002 and 2001 were
$2,663,291 and $1,331,639,  respectively.  Principally, the increase of research
and development in 2002 was due to expenses associated with the ongoing research
and clinical activity of Pharma in the amount of $1,096,492.

During 2002,  the  Company's  major  operating  expenses of salaries,  brokerage
commissions, promotion, advertising, and legal costs accounted for approximately
$11,143,588 (64%) of the total operating expenses of $17,496,226, an increase of
60% over the 2001 amount of $6,983,346.  The selling, general and administrative
expenses  related to Darius for 2002 and 2001 were  $3,235,793  and  $2,457,236,
respectively.

Revenues of Caribbean Pacific Natural Products,  Inc. (discontinued  operations)
for the twelve  months  ended  December 31, 2002 and 2001 were  $2,040,312,  and
$2,176,470,  respectively,  net losses for the same periods were  $1,322,355 and
$718,156.  The loss relating to 2002 includes an amount of $633,233  relating to
the asset  impairment.  The results of Caribbean  Pacific  Natural  Products are
represented  as  discontinued  operations in the  statements of operations  with
balance sheet items being  represented  as assets held for sale and  liabilities
associated with assets held for sale.

Total assets of the Company at December 31, 2002 and 2001 were  $24,934,956  and
$24,755,795,   respectively.   Working   capital   decreased  by  $1,963,872  to
$16,661,949  at December 31, 2002.  The primary  influences  on working  capital
during 2002 were: the increase in cash balances, which was assisted by exercises
of warrants and options during 2002;  reductions in inventory on hand; increased
advertising  accruals  due to  increased  activity;  and  increased  liabilities
resulting from the fair value of warrants  granted  associated  with  consulting
services.

MATERIAL COMMITMENTS AND SIGNIFICANT AGREEMENTS

The Company's  products are  manufactured  by outside  sources.  The Company has
agreements in place with these manufacturers,  which ensure a reliable source of
product for the future.  A  significant  amount of the revenues  received by the
facility producing the Cold-Eeze(R) lozenge is from the Company.


                                      -18-


The Company has agreements in place with  independent  brokers whose function is
to  represent  the  Company's  Cold-Eeze(R)  products,  in a  product  sales and
promotion  capacity,  throughout  the  United  States and  internationally.  The
brokers are remunerated through a commission structure, based on a percentage of
sales collected, less certain deductions.

There are significant royalty and commission  agreements between the Company and
the developer of the  Company's  Cold-Eeze(R)  zinc  gluconate  glycine  lozenge
products.  The Company has entered into royalty and consulting  agreements  with
the  developer  that  requires  payment of 5% on sales  collected,  less certain
deductions, and with the founders, who are officers,  directors and stockholders
of the Company,  who share a commission of 5% on sales  collected,  less certain
deductions.  The  agreements  with the  developers  expire in 2007, and with the
founders in 2005.

The Company has an  agreement  with the former  owners of the Utah based  direct
marketing and selling company, whereby they receive payments, currently totaling
5% of  net  sales  collected,  for  use  of  product  formulations,  consulting,
confidentiality and non-compete  agreements.  Amounts paid or payable under such
agreement during 2003 and 2002 were $880,091 and $678,454, respectively. Amounts
payable  under such  agreement  at December  31, 2003 and 2002 were  $68,388 and
$63,866, respectively.

In August 2003,  the Company  entered into a licensing  agreement  with a patent
holder  relating to utilizing a nasal spray product in the treatment of symptoms
of the common cold.  The Company  agreed to pay the patent  holder a two percent
royalty  on  net  sales  of  nasal  spray  products,  less  certain  deductions,
throughout  the term of this  agreement,  expiring  no later  than  April  2014.
Amounts  paid or payable  under such  agreement  during the twelve  month period
ended December 31, 2003 were $26,613,  with zero in the 2002 comparable  period.
An amount of $1,613  relating  to this  agreement  was  accrued  or  payable  at
December 31, 2003.

Certain  operating  leases for  office and  warehouse  space  maintained  by the
Company resulted in rent expense for the years ended December 31, 2003, 2002 and
2001, of $255,078, $236,304 and $218,456, respectively. The future minimum lease
obligations under these operating leases are approximately $565,000.

The  Company  has  approximate  future  obligations  relating  to  research  and
development and property leases, over the next five years, as follows:

                        Research and         Property
             Year        Development          Leases            Total
            -----------------------------------------------------------
            2004         $1,500,000          $212,000        $1,712,000
            2005                 --           198,000           198,000
            2006                 --            98,000            98,000
            2007                 --            57,000            57,000
            2008                 --                --                --
            -----------------------------------------------------------
            Total        $1,500,000          $565,000        $2,065,000
            -----------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

The Company had working  capital of $18,257,354  and $16,661,949 at December 31,
2003 and 2002,  respectively.  Changes  in  working  capital  overall  have been
primarily  due  to  the  following  items:   cash  balances  have  decreased  by
$1,504,991, account receivable balances increased by $3,673,760 due to increased
revenues  in 2003,  particularly  the fourth  quarter,  inventory  decreased  by
$773,858 due to increased sales activity and the management of inventory levels.
Total  cash  balances  at  December  31,  2003  were  $11,392,089   compared  to
$12,897,080 at December 31, 2002.

Management  believes that its revised  strategy to establish  Cold-Eeze(R)  as a
recognized   brand  name,  its  broader  range  of  products,   its  diversified
distribution  methods as it relates to the health and wellness business segment,
adequate manufacturing capacity, growth in international sales together with its
current working capital should provide an internal source of capital to fund the
Company's business operations.  The cold-remedy and health and wellness segments
contribute current expenditure support in relation to the ethical pharmaceutical
segment. In addition to anticipated funding from operations, the Company and its
subsidiaries  may in the short and long term raise capital  through the issuance
of equity securities to finance anticipated growth.

Management is not aware of any trends,  events or uncertainties that have or are
reasonably  likely to have a material  negative  impact upon the  Company's  (a)
short-term  or long-term  liquidity,  or (b) net sales,  revenues or income from
continuing operations. Any challenge to the Company's patent rights could have a
material adverse effect on future liquidity of the Company; however, the Company
is not aware of any condition that would make such an event probable.


                                      -19-


Management  believes that cash generated from operations  along with its current
cash  balances  will be  sufficient  to  finance  working  capital  and  capital
expenditure requirements for at least the next twelve months.

IMPACT OF INFLATION

The Company is subject to normal  inflationary  trends and anticipates  that any
increased costs should be passed on to its customers.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company's  operations are not subject to risks of material  foreign currency
fluctuations, nor does it use derivative financial instruments in its investment
practices.  The Company  places its marketable  investments in instruments  that
meet high credit quality standards.  The Company does not expect material losses
with respect to its investment  portfolio or exposure to market risks associated
with interest rates. The impact on the Company's results of one percentage point
change in  short-term  interest  rates  would not have a material  impact on the
Company's future  earnings,  fair value, or cash flows related to investments in
cash equivalents or interest earning marketable securities.


                                      -20-


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                             Page
                                                                       ----

Balance Sheets as of December 31, 2003 and 2002                      F-1

Statements of Operations for the years ended December 31, 2003,
  2002, and 2001                                                     F-2

Statements of Stockholders' Equity for the years ended December 31,
  2003, 2002, and 2001                                               F-3

Statements of Cash Flows for the years ended December 31, 2003,
  2002, and 2001                                                     F-4

Notes to Financial Statements                                        F-5 to F-21

Responsibility for Financial Statements                              F-22

Report of Independent Auditors                                       F-23


                                      -21-


                             THE QUIGLEY CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS                                          December 31, 2003   December 31, 2002
                                                                                                         (Restated-Note 15)
                                                                                     -----------------   ------------------

CURRENT ASSETS:

          Cash and cash equivalents                                                     $ 11,392,089        $ 12,897,080
          Accounts receivable (net of doubtful accounts of $808,812 and $737,782)          7,861,883           4,188,123
          Inventory                                                                        3,752,903           4,526,761
          Prepaid expenses and other current assets                                          733,597             490,117
          Assets of discontinued operations                                                       --             374,007
                                                                                        ------------        ------------
              TOTAL CURRENT ASSETS                                                        23,740,472          22,476,088
                                                                                        ------------        ------------

PROPERTY, PLANT AND EQUIPMENT - NET                                                        2,418,159           2,336,736
                                                                                        ------------        ------------

OTHER ASSETS:
          Goodwill                                                                            30,763              30,763
          Other assets                                                                        80,365               1,000
          Assets of discontinued operations                                                       --              90,369
                                                                                        ------------        ------------
               TOTAL OTHER ASSETS                                                            111,128             122,132
                                                                                        ------------        ------------

TOTAL ASSETS                                                                            $ 26,269,759        $ 24,934,956
                                                                                        ============        ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

          Accounts payable                                                              $    524,136        $    394,675
          Accrued royalties and sales commissions                                          1,594,457           1,146,495
          Accrued advertising                                                              1,354,536           1,559,575
          Accrued consulting                                                                      --             975,000
          Other current liabilities                                                        2,009,989           1,353,383
          Liabilities of discontinued operations                                                  --             385,011
                                                                                        ------------        ------------
               TOTAL CURRENT LIABILITIES                                                   5,483,118           5,814,139
                                                                                        ------------        ------------

COMMITMENTS AND CONTINGENCIES  (NOTE 12)

STOCKHOLDERS' EQUITY:

          Common stock, $.0005 par value; authorized 50,000,000;
            Issued: 16,149,079 and 16,102,670 shares                                           8,074               8,051
          Additional paid-in-capital                                                      34,281,449          33,290,222
          Retained earnings                                                               11,685,277          11,010,703
          Less: Treasury stock, 4,646,053 and 4,646,053 shares, at cost                  (25,188,159)        (25,188,159)
                                                                                        ------------        ------------
               TOTAL STOCKHOLDERS' EQUITY                                                 20,786,641          19,120,817
                                                                                        ------------        ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $ 26,269,759        $ 24,934,956
                                                                                        ============        ============

           See accompanying notes to consolidated financial statements


                                       F-1


                             THE QUIGLEY CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                 Year Ended          Year Ended          Year Ended
                                                             December 31, 2003   December 31, 2002    December 31, 2001
                                                             -----------------   ------------------   -----------------

NET SALES                                                       $ 41,499,163        $ 29,271,780        $ 21,225,622

LICENSING FEES                                                            --             148,866           1,546,592
                                                                ------------        ------------        ------------

TOTAL REVENUE                                                     41,499,163          29,420,646          22,772,214
                                                                ------------        ------------        ------------

COST OF SALES                                                     21,487,763          17,208,836          10,220,849
                                                                ------------        ------------        ------------

GROSS PROFIT                                                      20,011,400          12,211,810          12,551,365
                                                                ------------        ------------        ------------

OPERATING EXPENSES:
      Sales and marketing                                          6,166,318           4,941,174           3,220,789
      Administration                                               9,843,846           9,891,761           7,429,766
      Research and development                                     3,365,698           2,663,291           1,331,639
                                                                ------------        ------------        ------------
TOTAL OPERATING EXPENSES                                          19,375,862          17,496,226          11,982,194
                                                                ------------        ------------        ------------

INCOME (LOSS) FROM OPERATIONS                                        635,538          (5,284,416)            569,171

INTEREST AND OTHER INCOME                                             93,385             152,313             364,949
                                                                ------------        ------------        ------------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES
                                                                     728,923          (5,132,103)            934,120
                                                                ------------        ------------        ------------

INCOME TAXES                                                              --                  --                  --
                                                                ------------        ------------        ------------

INCOME (LOSS) FROM CONTINUING OPERATIONS                             728,923          (5,132,103)            934,120
                                                                ------------        ------------        ------------

DISCONTINUED OPERATIONS:
 Loss from discontinued operations                                   (54,349)           (689,122)           (718,156)
 Loss on impairment related to investment in sun-care and
 skincare Operations                                                      --            (633,233)                 --
                                                                ------------        ------------        ------------
NET INCOME (LOSS)                                               $    674,574        ($ 6,454,458)       $    215,964
                                                                ============        ============        ============

BASIC EARNINGS PER COMMON SHARE:
  Income (loss) from continuing operations                      $       0.06        ($      0.47)       $       0.09
  Loss from discontinued operations                                       --               (0.12)              (0.07)
                                                                ------------        ------------        ------------
  Net Income (loss)                                             $       0.06        ($      0.59)       $       0.02
                                                                ============        ============        ============

DILUTED EARNINGS PER COMMON SHARE:
  Income (loss) from continuing operations                      $       0.05        ($      0.47)       $       0.09
  Loss from discontinued operations                                       --               (0.12)              (0.07)
                                                                ------------        ------------        ------------
  Net Income (loss)                                             $       0.05        ($      0.59)       $       0.02
                                                                ============        ============        ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
      Basic                                                       11,467,087          10,893,944          10,675,153
                                                                ============        ============        ============

      Diluted                                                     14,910,246          10,893,944          10,750,687
                                                                ============        ============        ============

           See accompanying notes to consolidated financial statements


                                       F-2


                             THE QUIGLEY CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                               (RESTATED-NOTE 15)

                                        Common                        Additional
                                         Stock           Issued        Paid-in-        Treasury        Retained
                                        Shares           Amount        Capital          Stock          Earnings           Total
                                     ---------------------------------------------------------------------------------------------

BALANCE JANUARY 1, 2001               10,655,153         $7,636      $28,871,887    ($25,158,028)    $17,249,197       $20,970,692
                                     ---------------------------------------------------------------------------------------------

Treasury stock                           (30,000)                                        (30,131)                          (30,131)

Shares issued for net assets
acquired                                  50,000             25           43,725                                            43,750

Net income                                                                                               215,964           215,964
                                     ---------------------------------------------------------------------------------------------

BALANCE DECEMBER 31, 2001             10,675,153          7,661       28,915,612     (25,188,159)     17,465,161        21,200,275
                                     ---------------------------------------------------------------------------------------------

Tax benefits from options,
  warrants & common stock                                            828,177                                           828,177

Tax benefit allowance                                                   (828,177)                                         (828,177)

Warrants issued for service -
  (Restated-Note 15)                                                   1,125,000                                         1,125,000

Proceeds from options and warrants
exercised                                781,464            390        3,249,610                                         3,250,000

Net loss                                                                                              (6,454,458)       (6,454,458)
                                     ---------------------------------------------------------------------------------------------

BALANCE DECEMBER 31, 2002 -
  (Restated-Note 15)                  11,456,617          8,051       33,290,222     (25,188,159)     11,010,703        19,120,817
                                     ---------------------------------------------------------------------------------------------

Tax benefits from options,
  warrants & common stock                                            133,014                                           133,014

Tax benefit allowance                                                   (133,014)                                         (133,014)

Warrants issued for service                                              975,000                                           975,000

Proceeds from options and warrants
exercised                                 46,409             23           16,227                                            16,250

Net income                                                                                               674,574           674,574
                                     ---------------------------------------------------------------------------------------------

BALANCE DECEMBER 31, 2003             11,503,026         $8,074      $34,281,449    ($25,188,159)    $11,685,277       $20,786,641
                                     =============================================================================================

           See accompanying notes to consolidated financial statements


                                       F-3


                             THE QUIGLEY CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               Year Ended          Year Ended          Year Ended
                                                              December 31,        December 31,        December 31,
                                                                  2003                2002                2001
                                                              ------------        ------------        ------------
OPERATING ACTIVITIES:
Net income (loss)                                             $    674,574        ($ 6,454,458)       $    215,964
                                                              ------------        ------------        ------------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
 NET CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS:
  Loss from discontinued operations                                 54,349             689,122             718,156
  Loss on impairment related to discontinued operations                 --             633,233                  --
  Depreciation and amortization                                    473,593             409,068             458,741
  Compensation satisfied with common stock warrants                     --           2,100,000                  --
  Bad debts provision                                               71,030              18,472             183,014
  (INCREASE) DECREASE IN ASSETS:
       Accounts receivable                                      (3,744,790)            (31,201)           (448,426)
       Inventory                                                   773,858           1,564,459             862,832
       Prepaid expenses and other current assets                  (243,480)            958,040            (328,528)
  INCREASE (DECREASE) IN LIABILITIES:
       Accounts payable                                            129,461            (424,130)             11,769
       Accrued royalties and sales commissions                     447,962             277,874            (541,126)
       Accrued advertising                                        (205,041)            890,783          (1,069,081)
       Other current liabilities                                   656,608             508,922            (412,175)
                                                              ------------        ------------        ------------
                 TOTAL ADJUSTMENTS                              (1,586,450)          7,594,642            (564,824)
                                                              ------------        ------------        ------------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES                                              (911,876)          1,140,184            (348,860)
                                                              ------------        ------------        ------------
INVESTING ACTIVITIES:
  Capital expenditures                                            (555,016)           (580,861)           (343,614)
  Cost of net assets acquired                                           --                  --             (30,763)
                                                              ------------        ------------        ------------
NET CASH FLOWS USED IN INVESTING
  ACTIVITIES                                                      (555,016)           (580,861)           (374,377)
                                                              ------------        ------------        ------------
FINANCING ACTIVITIES:
  Proceeds from exercises of options and warrants                   16,250           3,250,000                  --
  Repurchase of common stock                                            --                  --             (30,131)
                                                              ------------        ------------        ------------
NET CASH FLOWS PROVIDED BY (USED IN)
  FINANCING ACTIVITIES                                              16,250           3,250,000             (30,131)
                                                              ------------        ------------        ------------

NET CASH USED IN DISCONTINUED
  OPERATIONS                                                       (54,349)           (596,548)           (844,911)
                                                              ------------        ------------        ------------

NET (DECREASE) INCREASE IN CASH                                 (1,504,991)          3,212,775          (1,598,279)

CASH & CASH EQUIVALENTS, BEGINNING OF
  PERIOD                                                        12,897,080           9,684,305          11,282,584
                                                              ------------        ------------        ------------

CASH & CASH EQUIVALENTS,
  END OF PERIOD                                               $ 11,392,089        $ 12,897,080        $  9,684,305
                                                              ============        ============        ============

           See accompanying notes to consolidated financial statements


                                       F-4


                             THE QUIGLEY CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BUSINESS

The Quigley  Corporation (the "Company"),  organized under the laws of the state
of Nevada, is engaged in the development, manufacturing, and marketing of health
and homeopathic  products that are being offered to the general public,  and the
research and  development  of potential  prescription  products.  The Company is
organized  into three  business  segments,  which are,  Cold-Remedy,  Health and
Wellness,  and Ethical  Pharmaceutical.  For the fiscal periods  presented,  the
Company's revenues have come from the Company's Cold-Remedy business segment and
the Health and Wellness business segment.

The Company's  principal  cold-remedy  product,  Cold-Eeze(R),  a zinc gluconate
glycine formulation  (ZIGG(TM)) is an over-the-counter  consumer product used to
reduce the  duration  and  severity  of the common  cold and is sold in lozenge,
sugar-free  tablet  and nasal  spray  forms  and is  proven in two  double-blind
clinical  studies to reduce the duration and severity of common cold symptoms by
nearly half.

Darius was formed in January 2000 to introduce  new products to the  marketplace
through a  network  of  independent  distributors.  Darius  is a direct  selling
organization  specializing in proprietary  health and wellness  products,  which
commenced  shipping  product to  customers  in the third  quarter  of 2000.  The
continued  success of this  segment is  dependent,  among other  things,  on the
Company's ability to recruit and maintain active independent representatives; to
continue to make available new and innovative products and services; continue to
conform with domestic and international regulatory agencies; and to maintain and
improve  adequate  system  capabilities.  The  foregoing  risks could  result in
significant  reductions in revenues and profitability of the health and wellness
segment.

The formation of Darius has provided  diversification to the Company in both the
method of product  distribution  and the broader range of products  available to
the  marketplace  serving as a balance  to the  seasonal  revenue  cycles of the
Cold-Eeze(R) branded products.

In January 2001, the Company formed an Ethical  Pharmaceutical  Unit,  Pharma, a
wholly-owned subsidiary of the Company, the Ethical Pharmaceutical segment, that
is under the  direction  of its  Executive  Vice  President  and Chairman of its
Medical Advisory  Committee.  The  establishment  of a dedicated  pharmaceutical
subsidiary may enable the Company to diversify into the prescription drug market
and to ensure safe and effective  distribution of these important  potential new
products  currently  under  development.  At this time,  three patents have been
issued and assigned to the Company resulting from research activity of Pharma.

During 2000, the Company acquired a 60% ownership  position in Caribbean Pacific
Natural Products, Inc. ("CPNP"), a leading developer and marketer of all-natural
sun-care and  skincare  products for luxury  resorts,  theme parks and spas.  In
December  2002,  the Board of Directors  of the Company  approved a plan to sell
CPNP. On January 22, 2003,  the Company  completed the sale of the Company's 60%
equity interest in CPNP to Suncoast Naturals, Inc. ("Suncoast").  See discussion
in Notes to Financial Statements, Note 3 - Discontinued Operations.

The business of the Company is subject to federal and state laws and regulations
adopted  for  the  health  and  safety  of  users  of  the  Company's  products.
Cold-Eeze(R)  is a homeopathic  remedy that is subject to regulations by various
federal,  state  and  local  agencies,  including  the FDA  and the  Homeopathic
Pharmacopoeia of the United States.

The Company competes with suppliers varying in range and size in the cold-remedy
products arena.  Because  Cold-Eeze(R) has been clinically  proven,  it offers a
significant  advantage over other suppliers in the over-the-counter  cold-remedy
market.   The  Company  has  several  Broker,   Distributor  and  Representative
Agreements,  both nationally and  internationally and the product is distributed
through numerous  independent and chain drug and discount stores  throughout the
United States.

The  Company  continues  to  use  the  resources  of  independent  national  and
international  brokers complementing its own in-house personnel to represent the
Company's  over-the-counter  cold-remedy  products,  thereby  saving capital and
other ongoing expenditures that would otherwise be incurred.

Pharma,  a wholly owned  subsidiary of the Company,  the Ethical  Pharmaceutical
segment, is currently undergoing research and development activity in compliance
with regulatory  requirements.  The Company is at the initial stages of what may
be a  lengthy  process  to  develop  these  patent  applications  into a line of
naturally-derived patented prescription drugs.


                                       F-5


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Consolidated  Financial  Statements  include the accounts of the Company and
its wholly owned subsidiaries.  All inter-company transactions and balances have
been eliminated.  In the opinion of management,  all adjustments necessary for a
fair presentation of the consolidated  financial position,  consolidated results
of operations and consolidated cash flows, for the periods indicated,  have been
made.  Prior  period  amounts  have  been  reclassified  to  conform  with  this
presentation.

During 2000, the Company acquired a 60% ownership  position in Caribbean Pacific
Natural  Products,   Inc.,   ("CPNP"),  a  leading  developer  and  marketer  of
all-natural  sun-care and skincare products for luxury resorts,  theme parks and
spas. In December 2002, the Board of Directors of the Company approved a plan to
sell CPNP. On January 22, 2003, the Board of Directors of the Company  completed
the sale of the Company's 60% equity interest in CPNP to Suncoast Naturals, Inc.
("Suncoast"). In exchange for its 60% equity interest in CPNP, the Company shall
receive:  (i) 750,000  shares of  Suncoast's  common stock,  which  Suncoast has
agreed, at its cost and within 60 days from the closing,  to register for public
resale  through  an  appropriate   registration   statement  (this  registration
statement  has not  been  declared  effective  by the  Securities  and  Exchange
Commission) and (ii) 100,000 shares of Suncoast's Series A Redeemable  Preferred
Stock, which bears interest at a rate of 4.25% per annum and which is redeemable
from time to time after March 31, 2003 in such amounts as is equal to 50% of the
free cash flow  reported  by  Suncoast in the  immediately  preceding  quarterly
financial statements divided by the redemption price of $10.00 per share.

The Company owns 19.5% of Suncoast's issued and outstanding capital stock, which
investment  is  accounted  for on the cost  basis  method.  Results  of CPNP are
presented  as  discontinued   operations  in  the  Consolidated   Statements  of
Operations and the Consolidated Balance Sheets.

On January 2, 2001,  the Company  acquired  certain  assets and assumed  certain
liabilities of a privately held company, located in Utah, involved in the direct
marketing and  distribution of health and wellness  products.  This  acquisition
required  cash  payments  that  approximated  $110,000 and 50,000  shares of the
Company's stock issued to the former owners of the net assets acquired.  The net
assets  acquired  included  assets  totaling  $536,000 and  liabilities  assumed
approximating  $416,000.  Also required were payments  totaling $540,000 for the
use of  product  formulations;  consulting;  confidentiality  and a  non-compete
agreement. To maintain the continuous application of these arrangements, fees of
5% on net sales  collected  must be paid to the former owners which are expensed
as  incurred.  The  operating  results  have  been  included  in  the  Company's
Consolidated  Statements of Operations  from the date of  acquisition.  Prior to
January 1, 2002, the excess of cost over net assets acquired had been subject to
amortization on a straight-line  basis over a period of 15 years.  Subsequent to
2001, the account will only be reduced if the value becomes impaired.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent liabilities at the dates of the financial statements and the reported
amounts of revenues and expenses  during the reporting  periods.  Actual results
could differ from those estimates.

CASH EQUIVALENTS

The Company considers all highly liquid  investments with an initial maturity of
three  months  or less at the  time of  purchase  to be cash  equivalents.  Cash
equivalents  include cash on hand and monies invested in money market funds. The
carrying  amount  approximates  the  fair  market  value  due to the  short-term
maturity of these investments.

INVENTORIES

Inventories  are stated at the lower of cost or  market.  The  Company  uses the
first-in,  first-out  ("FIFO") method of determining  cost for all  inventories.
Inventories included raw material amounts of approximately $729,000 and $337,000
at December 31, 2003 and 2002, respectively.


                                       F-6


PROPERTY, PLANT AND EQUIPMENT

Property,  plant  and  equipment  is  recorded  at  cost.  The  Company  uses  a
combination of straight-line and accelerated  methods in computing  depreciation
for financial reporting purposes. The annual provision for depreciation has been
computed in  accordance  with the  following  ranges of  estimated  asset lives:
building and  improvements  - twenty  years;  machinery  and equipment - five to
seven years; computer software - three years; and furniture and fixtures - seven
years.

GOODWILL AND INTANGIBLE ASSETS

Patent rights have been  amortized on a  straight-line  basis over the period of
the related licensing  agreements,  which  approximated 67 months and were fully
amortized as of March 2002.  Amortization  costs  incurred for the twelve months
periods  ended  December  31,  2003,  2002 and 2001,  were zero and  $21,940 and
$87,761, respectively.

As of December  31, 2003 and December 31,  2002,  intangible  assets  consist of
goodwill of $30,763.  Goodwill is not amortized but reviewed for impairment when
events and circumstances  indicate the carrying amount may not be recoverable or
on an annual basis. In 2002, the Company realized an impairment loss of $296,047
relating to goodwill in CPNP, which was reflected in discontinued operations.

CONCENTRATION OF RISKS

Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations of credit risk consist  principally of cash investments and trade
accounts receivable.

The  Company  maintains  cash and cash  equivalents  with four  major  financial
institutions.  Since the  Company  maintains  amounts  in  excess of  guarantees
provided by the Federal Depository Insurance  Corporation,  the Company performs
periodic  evaluations  of  the  relative  credit  standing  of  these  financial
institutions and limits the amount of credit exposure with any one institution.

Trade accounts receivable  potentially  subjects the Company to credit risk. The
Company  extends  credit  to its  customers  based  upon  an  evaluation  of the
customer's financial condition and credit history and generally does not require
collateral.  The Company has historically  incurred  minimal credit losses.  The
Company's  broad  range of  customers  includes  many  large  wholesalers,  mass
merchandisers  and  multi-outlet  pharmacy  chains,  five of which account for a
significant  percentage  of sales volume,  representing  23% for the years ended
December  31,  2003 and 2002,  and 35% for the year  ended  December  31,  2001.
Customers  comprising the five largest accounts receivable balances  represented
34% and 44% of total trade  receivable  balances at December  31, 2003 and 2002,
respectively.   During  2003,   approximately  97%  of  the  Company's  revenues
originated  in the  United  States  with the  remainder  being  attributable  to
international trade.

The  Company  currently  uses  separate  suppliers  to produce  Cold-Eeze(R)  in
lozenge,  sugar-free  tablet and nasal spray form.  The  Company's  revenues are
currently generated from the sale of the Cold-Eeze(R) product with the remaining
revenue  coming  from the health  and  wellness  segment.  The  lozenge  form is
manufactured by a contract manufacturer,  a significant amount of whose revenues
are from the Company.  The other forms are  manufactured  by third  parties that
produce  a  variety  of  other  products  for  other  customers.   Should  these
relationships   terminate  or  discontinue  for  any  reason,  the  Company  has
formulated  a  contingency  plan in order to prevent  such  discontinuance  from
materially  affecting  the  Company's  operations.  Any  such  termination  may,
however,  result  in a  temporary  delay in  production  until  the  replacement
facility is able to meet the Company's production requirements.

Raw material used in the  production  of the product is available  from numerous
sources. Currently, it is being procured from a single vendor in order to secure
purchasing economies. In a situation where this one vendor is not able to supply
the  contract  manufacturer  with  the  ingredients,  other  sources  have  been
identified.

Darius' product for resale is sourced from several suppliers.  In the event that
such sources were no longer in a position to supply Darius with  product,  other
vendors have been identified as reliable  alternatives with minimal adverse loss
of business.

LONG-LIVED ASSETS

The Company  reviews its long-lived  assets for impairment on an exception basis
whenever events or changes in circumstances indicate that the carrying amount of
the assets may not be recoverable through future cash flows. If it is determined
that an impairment loss has occurred based on the expected cash flows, a loss is
recognized in the Statement


                                       F-7


of Operations. In 2002, in addition to its goodwill impairment loss in CPNP, the
Company  realized an additional  impairment loss of $337,186 from its investment
in CPNP,  which was reflected in discontinued  operations.  The total impairment
loss of $633,233 was reflected in discontinued operations.

REVENUE RECOGNITION

Sales are recognized at the time ownership is transferred to the customer, which
for the cold-remedy segment is the time the shipment is received by the customer
and for the  health and  wellness  segment,  when the  product is shipped to the
customer.  Sales returns and  allowances are provided for in the period that the
related  sales  are  recorded.  Provisions  for  these  reserves  are  based  on
historical  experience.  Total  revenues  for the twelve  months  periods  ended
December  31,  2003,  2002 and  2001  include  amounts  of  zero,  $148,866  and
$1,546,592,  respectively,  as a result of the  settlement  of the  infringement
suit,  related to  licensing  fees,  against Gel Tech,  LLC,  the  developer  of
Zicam(TM), and Gum Tech International, Inc., its distributor.

SHIPPING AND HANDLING

Product  sales  relating to Health and  Wellness  products  carry an  additional
identifiable shipping and handling charge to the purchaser,  which is classified
as revenue.  For  cold-remedy  products,  such costs are included as part of the
invoiced  price. In all cases costs related to this revenue are recorded in cost
of sales.

STOCK COMPENSATION

Stock options and warrants for purchase of the Company's  common stock have been
granted to both  employees  and  non-employees  since the date of the  Company's
public  inception.   Options  and  warrants  are  exercisable  during  a  period
determined  by the  Company,  but in no event later than ten years from the date
granted.

The Company  applies  Accounting  Principles  Board Opinion No. 25 ("APB 25") in
accounting  for its grants of options to employees.  Under the  intrinsic  value
method  prescribed  by APB 25, no  compensation  expense  relating  to grants to
employees has been recorded by the Company in periods reported.  If compensation
expense for awards made during the years ended December 31, 2003,  2002 and 2001
had been  determined  under the fair  value  method of  Statement  of  Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based  Compensation,"
the  Company's  net income and earnings per share would have been reduced to the
pro forma amounts indicated below:

                                                     Year Ended            Year Ended           Year Ended
                                                    December 31,          December 31,         December 31,
                                                        2003                  2002                 2001
                                                    ------------       ------------------      ------------
      Net income (loss)
         As reported                                   $674,574           ($6,454,458)          $215,964
         Compensation expense                        (2,026,720)           (2,072,220)          (244,000)
         Pro forma                                  ($1,352,146)          ($8,526,678)          ($28,036)

      Basic earnings (loss) per share
         As reported                                    $0.06                ($0.59)              $0.02
         Pro forma                                     ($0.12)               ($0.78)                --
      Diluted earnings (loss) per share
         As reported                                    $0.05                ($0.59)              $0.02
         Pro forma                                     ($0.12)               ($0.78)                --

Expense  relating to warrants granted to  non-employees  has been  appropriately
recorded in the periods  presented  based on either fair values agreed upon with
the grantees or fair values as  determined  by the Black  Scholes  pricing model
dependent upon the circumstances relating to the specific grants.

A total of 424,000,  477,000 and 400,000 stock options were granted to employees
and non-employees in 2003, 2002 and 2001, respectively.

ROYALTIES

The Company  includes  royalties  and founders  commissions  incurred as cost of
sales based on agreement terms.


                                       F-8


ADVERTISING

Advertising  costs are  expensed  within the period in which they are  utilized.
Advertising  expense is  comprised  of media  advertising,  presented as part of
sales and marketing expense; co-operative advertising, which is accounted for as
part of net sales;  and free product,  which is accounted for as part of cost of
sales.  Advertising  costs incurred for the years ended December 31, 2003,  2002
and 2001 were $5,483,465, $4,794,955 and $3,402,006,  respectively.  Included in
prepaid  expenses and other current  assets was $68,000 and $236,875 at December
31, 2003 and 2002 relating to prepaid advertising and promotion expenses.

RESEARCH AND DEVELOPMENT

Research and development costs are charged to operations in the period incurred.
Expenditures  for the  years  ended  December  31,  2003,  2002  and  2001  were
$3,365,698, $2,663,291 and $1,331,639,  respectively.  Principally, the increase
in research and development  costs in 2003 was due to expenses  incurred as part
of the product  research costs related to Pharma and study costs associated with
Cold-Eeze(R). Pharma is currently involved in research activity following patent
applications  that the Company has acquired and research and development  costs,
relating to potential products, are expected to increase significantly over time
as product research and testing continues.

INCOME TAXES

The  Company  utilizes  an asset  and  liability  approach  which  requires  the
recognition  of  deferred  tax  assets  and   liabilities  for  the  future  tax
consequences  of events that have been  recognized  in the  Company's  financial
statements or tax returns.  In estimating future tax  consequences,  the Company
generally  considers all expected future events other than enactments of changes
in the tax law or rates. Until sufficient taxable income to offset the temporary
timing   differences   attributable   to  operations   and  the  tax  deductions
attributable to option,  warrant and stock  activities are assured,  a valuation
allowance equaling the total deferred tax asset is being provided.  See Notes to
Financial Statements, Note 8 - Income Taxes for further discussion.

NOTE 3 - DISCONTINUED OPERATIONS

Effective  July 1, 2000, the Company  acquired a 60% ownership  position of CPNP
and was accounted for by the purchase method of accounting and accordingly,  the
operating  results  were  included  in  the  Company's   consolidated  financial
Statements  from the  date of  acquisition.  This  majority  ownership  position
required a cash investment that approximated $812,000 and the provision for a $1
million line of credit, collateralized by inventory, accounts receivable and all
other assets of CPNP. The net assets of CPNP at the acquisition date principally
consisted of a product license and  distribution  rights with no recorded value,
inventory  and fixed assets of $312,915  and $510,000 of working  capital with a
contribution to minority interest of $329,166.

In December 2002, the Board of Directors of the Company  approved a plan to sell
CPNP. On January 22, 2003,  the Board of Directors of the Company  completed the
sale of the Company's 60% equity  interest in CPNP to Suncoast.  In exchange for
its 60% equity  interest in CPNP,  the Company  received:  (i) 750,000 shares of
Suncoast's  common stock,  which Suncoast has agreed,  at its cost and within 60
days from the closing,  to register  for public  resale  through an  appropriate
registration  statement  (this  registration  statement  has not  been  declared
effective by the Securities and Exchange  Commission) and (ii) 100,000 shares of
Suncoast's Series A Redeemable  Preferred Stock,  which bears interest at a rate
of 4.25% per annum and which is  redeemable  from time to time  after  March 31,
2003 in such  amounts  as is equal  to 50% of the free  cash  flow  reported  by
Suncoast in the immediately  preceding quarterly financial statements divided by
the redemption  price of $10.00 per share.  The Company owns 19.5% of Suncoast's
issued and  outstanding  capital  stock valued at $79,365,  which  investment is
accounted for on the cost basis method,  representing the Company's share of the
fair value of Suncoast at the time the transaction was recorded,  this amount is
included in Other Assets in the Consolidated Balance Sheets. During August 2003,
a  registration  statement  was  filed  but  an  effective  date  has  not  been
determined.  The disposal of CPNP was completed in order to allow the Company to
focus resources on other activities and clinical research and development.

Sales of CPNP for all periods  commencing on the date of  acquisition on July 1,
2000 up to date of disposal on January 22, 2003, were $5,075,472, cumulative net
losses  during  that  period  were  $2,232,620.  The loss  includes an amount of
$633,233  relating to the asset impairment,  reported in 2002.  Revenues of CPNP
for the twelve  months  periods  ended  December  31,  2003,  2002 and 2001 were
$59,824 and $2,040,312  and  $2,176,470,  respectively,  net losses for the same
periods  $54,349,  $1,322,355  and $718,155,  respectively.  Results of CPNP are
presented  as  discontinued   operations  in  the  Consolidated   Statements  of
Operations and in the Consolidated Balance Sheets.

The major classes of balance sheet items of discontinued  operations at December
31, 2002 were inventory, accounts receivable,  property, plant and machinery and
accounts payable.


                                       F-9


NOTE 4 - SEGMENT INFORMATION

The basis for presenting  segment  results  generally is consistent with overall
Company reporting.  The Company reports information about its operating segments
in  accordance  with  Financial  Accounting  Standard  Board  Statement No. 131,
"Disclosure  About  Segments of an Enterprise  and Related  Information,"  which
establishes  standards for  reporting  information  about a company's  operating
segments. All consolidating items are included in Other.

The  Company  has  divided  its  operations  into three  reportable  segments as
follows:  The  Quigley  Corporation  (Cold-  Remedy),   whose  main  product  is
Cold-Eeze(R),  a proprietary zinc gluconate glycine lozenge for the common cold;
Darius (Health and Wellness), whose business is the sale and direct marketing of
a range of health and wellness  products and Pharma,  (Ethical  Pharmaceutical),
currently  involved  in research  and  development  activity  to develop  patent
applications for potential pharmaceutical products.

As discussed in Notes to Financial Statements, Note 3 - Discontinued Operations,
the Company disposed of its Sun-care and Skincare segment.

Financial  information relating to 2003, 2002 and 2001 continuing  operations by
business segment follows:

----------------------------------------------------------------------------------------------------------------------
As of and for the twelve
months ended December 31,                Cold          Health and        Ethical
2003                                    Remedy          Wellness      Pharmaceutical         Other             Total
----------------------------------------------------------------------------------------------------------------------

Revenues
  Customers                          $20,474,969      $21,024,194               --                --       $41,499,163
  Inter-segment                               --               --               --                --                --
Segment operating profit (loss)        1,699,378        1,791,454      ($2,855,294)               --           635,538
Depreciation                             318,419          155,174               --                --           473,593
Capital expenditures                     414,129          140,887               --                --           555,016
Total assets                         $24,892,338      $ 3,881,970               --       ($2,504,549)      $26,269,759

----------------------------------------------------------------------------------------------------------------------
As of and for the twelve
months ended December 31,                Cold          Health and        Ethical
2002                                    Remedy          Wellness      Pharmaceutical         Other             Total
----------------------------------------------------------------------------------------------------------------------

Revenues
  Customers                          $14,199,833      $15,220,813               --                --       $29,420,646
  Inter-segment                               --               --               --                --                --
Segment operating profit (loss)       (4,839,359)       1,103,610      ($1,604,753)       $   56,086        (5,284,416)
Depreciation                             262,724          124,404               --                --           387,128
Capital expenditures                     290,983          289,878               --                --           580,861
Total assets                         $26,223,476        1,401,867               --       ($2,690,387)      $24,934,956

----------------------------------------------------------------------------------------------------------------------
As of and for the twelve
months ended December 31,                Cold          Health and        Ethical
2001                                    Remedy          Wellness      Pharmaceutical         Other             Total
----------------------------------------------------------------------------------------------------------------------

Revenues
  Customers                          $16,983,635      $ 5,788,579               --                --       $22,772,214
  Inter-segment                          116,385         (176,412)              --        $   60,027                --
Segment operating profit (loss)        1,638,264         (729,374)       ($467,436)          127,717           569,171
Depreciation                             269,392           74,269               --                --           343,661
Capital expenditures                     176,282          167,332               --                --           343.614
Total assets                         $26,726,729      $   826,946               --       ($2,797,880)      $24,755,795


                                      F-10


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Consisted of the following as of:          December 31, 2003   December 31, 2002
                                           -----------------   -----------------

      Land                                     $  152,203         $  152,203
      Buildings and improvements                1,513,958          1,503,641
      Machinery and equipment                   1,432,818          1,061,852
      Computer software                           570,001            462,032
      Furniture and fixtures                      195,000            180,287
                                               ----------         ----------
                                                3,863,980          3,360,015
      Less: Accumulated  depreciation           1,445,821          1,023,279
                                               ----------         ----------
      Property, Plant and Equipment, net       $2,418,159         $2,336,736
                                               ==========         ==========

Depreciation  expense for the years ended  December 31, 2003,  2002 and 2001 was
$473,593, $387,128, and $343,661, respectively.

NOTE 6 - OTHER CURRENT LIABILITIES

Included in other  current  liabilities  are $458,359  and  $177,366  related to
accrued compensation at December 31, 2003 and 2002, respectively.

NOTE 7 - PATENT RIGHTS AND RELATED ROYALTY COMMITMENTS

During 1996,  the Company  entered into a licensing  agreement  resulting in the
utilization of the zinc gluconate  patent. In return for the acquisition of this
license,  the Company  issued a total of 240,000  shares of common  stock to the
patent holder and attorneys during 1996 and 1997. The related  intangible asset,
approximating $490,000, was valued at the fair value of these shares at the date
of the grant.  This asset value was  amortized  over the  remaining  life of the
patent that expired in March 2002.  The Company was required to pay a 3% royalty
on sales collected, less certain deductions, to the patent holder throughout the
term of this agreement, which also expired in 2002.

The Company also maintains a separate  representation and distribution agreement
relating to the development of the zinc gluconate  glycine product  formulation.
In return for exclusive  distribution rights, the Company must pay the developer
a 3% royalty and a 2%  consulting  fee based on sales  collected,  less  certain
deductions,   throughout  the  term  of  this   agreement,   expiring  in  2007.
Additionally,  a founder's  commission  totaling  5%, on sales  collected,  less
certain deductions,  is paid to two of the officers,  who are also directors and
stockholders of the Company, and whose agreements expire in 2005.

In August 2003,  the Company  entered into a licensing  agreement  with a patent
holder  relating to utilizing a nasal spray product in the treatment of symptoms
of the common cold.  The Company  agreed to pay the patent  holder a two percent
royalty  on  net  sales  of  nasal  spray  products,  less  certain  deductions,
throughout the term of this agreement, expiring no later than April 2014.

The expenses for the respective periods relating to such agreements  amounted to
$1,805,294,  $1,421,475,  and $1,399,847, for the years ended December 31, 2003,
2002, and 2001, respectively. Amounts accrued for these expenses at December 31,
2003 and 2002 were $915,109 and $603,387, respectively.

Amounts  included  in accrued  royalties  and sales  commissions  in the balance
sheets at December  31, 2003 and 2002,  apportioned  between  related  party and
other balances, are as follows:

                                                           2003          2002
                                                       ------------------------

      Related party balances                           $  456,748    $  301,695
      Other non-related party balances                  1,137,709       844,800
                                                       ------------------------
      Total accrued royalties and sales commissions    $1,594,457    $1,146,495
                                                       ------------------------


                                      F-11


NOTE 8 - INCOME TAXES

The provision (benefit) for income taxes, consists of the following:

                                          Year Ended         Year Ended         Year Ended
                                         December 31,       December 31,       December 31,
                                             2003               2002               2001
                                                        (Restated-Note 15)
                                         ------------   ------------------     ------------

Current:
     Federal                                      --                 --                 --
     State                                        --                 --                 --
                                         -----------        -----------        -----------
                                                  --                 --                 --
                                         -----------        -----------        -----------
Deferred:
     Federal                             ($  660,321)       ($  700,798)       $   340,861
     State                                   (71,457)           133,544            (24,977)
                                         -----------        -----------        -----------
                                            (731,778)        (  567,254)           315,884
                                         -----------        -----------        -----------

Valuation allowance                          731,778            567,254           (315,884)
                                         -----------        -----------        -----------

Total                                             --                 --                 --
                                         ===========        ===========        ===========

A reconciliation  of the statutory  federal income tax expense  (benefit) to the
effective tax is as follows:

                                          Year Ended         Year Ended         Year Ended
                                         December 31,       December 31,       December 31,
                                             2003               2002               2001
                                                        (Restated-Note 15)
                                         ------------   ------------------     ------------

Statutory rate                           $   247,834        ($1,744,916)       $   317,600
State taxes net of federal benefit           (47,162)            88,139            (17,134)
Permanent differences and other             (932,450)         1,089,523             15,418
                                         -----------        -----------        -----------
                                            (731,778)          (567,254)           315,884
                                         -----------        -----------        -----------

Less valuation allowance                     731,778            567,254           (315,884)
                                         -----------        -----------        -----------

          Total                                   --                 --                 --
                                         ===========        ===========        ===========

The tax effects of the primary "temporary  differences"  between values recorded
for assets and liabilities for financial  reporting purposes and values utilized
for  measurement  in  accordance  with tax  laws  giving  rise to the  Company's
deferred tax assets are as follows:

                                          Year Ended         Year Ended         Year Ended
                                         December 31,       December 31,       December 31,
                                             2003               2002               2001
                                                        (Restated-Note 15)
                                         ------------   ------------------     ------------

Net operating loss carry-forward         $ 5,313,829        $ 4,459,068        $ 3,082,051
Consulting costs                                  --            380,250            305,019
Bad debt expense                             331,849            187,992            263,654
Other                                        381,802            152,788            133,943
Valuation allowance                       (6,027,480)        (5,180,098)        (3,784,667)
                                         -----------        -----------        -----------
          Total                                   --                 --                 --
                                         ===========        ===========        ===========

Certain  exercises  of options and  warrants,  and  restricted  stock issued for
services that became  unrestricted  resulted in  reductions  to taxes  currently
payable and a  corresponding  increase to  additional-paid-in-capital  for prior
years. Certain tax benefits for option and warrant exercises totaling $1,871,986
are deferred and will be credited to  additional-paid-in-capital  when  existing
net operating  losses are used.  The cumulative  tax deduction  attributable  to
options, warrants and restricted stock is $47,520,526, which resulted in the net
operating  loss  carry-forwards  that  approximate  $13.6  million  for  federal
purposes,  of which $3.5 million will expire in 2019, $4.0 million in 2020, $6.1
million in 2022 and $13.8 million for state purposes, of which $9.7 million will
expire in 2009, $3.0 million in 2010, and $1.1 million in 2012. Until sufficient
taxable  income to offset  the  temporary  timing  differences  attributable  to
operations  and the tax  deductions  attributable  to option,  warrant and stock
activities are assured,  a valuation  allowance  equaling the total deferred tax
asset is being provided.


                                      F-12


NOTE 9 - EARNINGS PER SHARE

Basic earnings per share ("EPS")  excludes  dilution and is computed by dividing
income  available to common  stockholders  by the  weighted - average  number of
common  shares  outstanding  for the period.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were  exercised  or  converted  into common stock or resulted in the issuance of
common  stock  that  shared in the  earnings  of the  entity.  Diluted  EPS also
utilizes the treasury  stock method which  prescribes a theoretical  buy back of
shares from the  theoretical  proceeds of all options and  warrants  outstanding
during  the  period.  Since  there is a large  number of  options  and  warrants
outstanding,  fluctuations  in the  actual  market  price can have a variety  of
results for each period presented.

A  reconciliation  of the applicable  numerators and  denominators of the income
statement periods presented is as follows  (millions,  except earnings per share
amounts):

                                    Year Ended                  Year Ended                 Year Ended
                                 December 31, 2003           December 31, 2002          December 31, 2001
                           ---------------------------------------------------------------------------------

                            Income    Shares     EPS      Loss    Shares     EPS     Income   Shares    EPS
                           ---------------------------------------------------------------------------------

      Basic EPS              $0.7      11.5     $0.06    ($5.1)    10.9    ($0.47)    $0.9     10.7    $0.09

      Dilutives:
      Options and
      Warrants                 --       3.4                 --       --                 --      0.1
                           ---------------------------------------------------------------------------------
      Diluted EPS            $0.7      14.9     $0.05    ($5.1)    10.9    ($0.47)    $0.9     10.8    $0.09
                           =================================================================================

Options and  warrants  outstanding  at  December  31,  2003,  2002 and 2001 were
4,601,000,  4,262,500 and 4,014,000,  respectively, but were not included in the
2002   computation  of  diluted  earnings  per  share  because  the  effect  was
anti-dilutive.

NOTE 10 - STOCK COMPENSATION

Stock  options for purchase of the  Company's  common stock have been granted to
both  employees  and  non-employees.  Options  are  exercisable  during a period
determined  by the  Company,  but in no event later than ten years from the date
granted.

On December  2, 1997,  the  Company's  Board of  Directors  approved a new Stock
Option Plan ("Plan")  which was amended in 2001 and provides for the granting of
up to three million shares to employees.  Under this Plan, the Company may grant
options  to  employees,  officers  or  directors  of  the  Company  at  variable
percentages  of the  market  value of stock at the date of grant.  No  incentive
stock option shall be exercisable more than ten years after the date of grant or
five years where the individual owns more than ten percent of the total combined
voting power of all classes of stock of the Company.  Stockholders  approved the
Plan in 1998. A total of 424,000, 477,000 and 400,000 options were granted under
this Plan during the years ended December 31, 2003, 2002 and 2001, respectively.

The Company  applies  Accounting  Principles  Board Opinion No. 25 ("APB 25") in
accounting  for its grants of options to employees.  Under the  intrinsic  value
method  prescribed  by APB 25, no  compensation  expense  relating  to grants to
employees has been recorded by the Company in periods reported.  If compensation
expense for awards made during the years ended December 31, 2003,  2002 and 2001
had been  determined  under the fair  value  method of  Statement  of  Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based  Compensation,"
the  Company's  net income and earnings per share would have been reduced to the
pro forma  amounts  as  displayed  in Notes to  Financial  Statements,  Note 2 -
Summary of Significant Accounting Policies.

Expense  relating to options  granted to  non-employees  has been  appropriately
recorded in the periods  presented  based on either fair values agreed upon with
the grantees or fair values as  determined  by the  Black-Scholes  pricing model
dependent upon the circumstances relating to the specific grants.

The Company used the Black-Scholes  pricing model to determine the fair value of
stock  options  granted  during  the  periods   presented  using  the  following
assumptions: expected life of the option of 5 years and expected forfeiture rate
of 0%;  expected stock price  volatility  ranging between 67.9% and 120% for the
year ended  December 31, 2003,  ranging  between  108.0% and 119.2% for the year
ended December 31, 2002 and 58.9% for the year ended December 31, 2001; expected
dividend  yield of 0% and risk-free  interest rate of between 3.37% and 4.5% for
the year ended  December 31, 2003,  expected  dividend yield of 0% and risk-free
interest rate ranging  between  4.06% and 4.51% for the year ended  December 31,
2002,  expected dividend yield of 1.5% and risk-free  interest rate of 4.36% for
the year ended December 31, 2001, based on the expected life of the option.  The
impact of applying SFAS No. 123 in this pro forma  disclosure is not  indicative
of the  impact on future  years'  reported  net  income as SFAS No. 123 does not
apply to stock options


                                      F-13


granted prior to the beginning of fiscal year 1996 and additional  stock options
awards are anticipated in future years. All options were immediately vested upon
grant.

A summary of the status of the Company's  stock options and warrants  granted to
both  employees and  non-employees  as of December 31, 2003,  2002, and 2001 and
changes during the years then ended is presented below:

YEAR ENDED DECEMBER 31, 2003:

                                              Employees                  Non-Employees                   Total
                                      ------------------------       ---------------------        ----------------------
                                                      Weighted                    Weighted                      Weighted
                                                       Average                     Average                       Average
                                         Shares       Exercise       Shares       Exercise        Shares        Exercise
                                         (,000)         Price        (,000)         Price         (,000)         Price
                                      ----------------------------------------------------------------------------------
Options/warrants outstanding
   at beginning of period                  3,363        $4.45          900          $8.86          4,263         $5.38
Additions/deductions:
   Granted                                  394          8.11          280           9.35           674           8.63
   Exercised                                 16          0.83           35           1.00            51           0.95
   Cancelled                                255          5.35           30           3.25           285           5.13
                                      ----------------------------------------------------------------------------------
Options/warrants outstanding
   at end of period                        3,486        $4.82         1,115         $9.38          4,601         $5.92
                                      ----------------------------------------------------------------------------------
Options/warrants exercisable
   at end of period                        3,486                      1,115                        4,601
                                      ==================================================================================
Weighted average fair value of
   Grants                                  $4.78                      $1.63                        $3.47
Price range of options/warrants
   Exercised                           $0.81 - $1.26              $0.81  -  $1.26                $0.81 - $1.26
Price range of options/warrants
   outstanding                        $0.81 - $10.00             $0.81  -  $11.50               $0.81 - $11.50
Price range of options/warrants
   exercisable                        $0.81 - $10.00              $0.81 -  $11.50               $0.81 - $11.50

YEAR ENDED DECEMBER 31, 2002:

                                              Employees                  Non-Employees                   Total
                                      ------------------------       ---------------------        ----------------------
                                                      Weighted                    Weighted                      Weighted
                                                       Average                     Average                       Average
                                         Shares       Exercise       Shares       Exercise        Shares        Exercise
                                         (,000)         Price        (,000)         Price         (,000)         Price
                                      ----------------------------------------------------------------------------------
Options/warrants outstanding
   at beginning of period                  3,009        $4.32         1,005         $6.73          4,014         $4.92
Additions/deductions:
  Granted                                   432          5.26         1,045          8.12          1,477          7.28
  Exercised                                  58          1.68          800           4.72           858           4.51
  Cancelled                                  20          9.84          350          10.00           370          10.00
                                      ----------------------------------------------------------------------------------
Options/warrants outstanding
   at end of period                        3,363        $4.45          900          $8.86          4,263         $5.38
                                      ----------------------------------------------------------------------------------
Options/warrants exercisable
   at end of period                        3,363                       900                         4,263
                                      ==================================================================================
Weighted average fair value of
   grants                                  $4.34                      $0.84                        $1.87
Price range of options/warrants
   Exercised                            $0.81 - $5.13               $1.75 - $6.50                $0.81 - $6.50
Price range of options/warrants
   Outstanding                         $0.81 - $10.00              $0.81 - $11.50               $0.81 - $11.50
Price range of options/warrants
   exercisable                         $0.81 - $10.00              $0.81 - $11.50               $0.81 - $11.50


                                      F-14


YEAR ENDED DECEMBER 31, 2001:

                                              Employees                  Non-Employees                   Total
                                      ------------------------       ---------------------        ----------------------
                                                      Weighted                    Weighted                      Weighted
                                                       Average                     Average                       Average
                                         Shares       Exercise       Shares       Exercise        Shares        Exercise
                                         (,000)         Price        (,000)         Price         (,000)         Price
                                      ----------------------------------------------------------------------------------
Options/warrants outstanding
   at beginning of period                  2,747        $4.68         1,370         $5.42          4,117         $4.93
Additions/deductions:
  Granted                                   355          1.26           45           1.26           400           1.26
  Exercised                                  --           --            --             --            --            --
  Cancelled                                  93          3.35          410           1.75           503           2.05
                                      ----------------------------------------------------------------------------------
Options/warrants outstanding
   at end of period                        3,009        $4.32         1,005         $6.73          4,014         $4.92
                                      ----------------------------------------------------------------------------------
Options/warrants exercisable
   at end of period                        3,009                      1,005                        4,014
                                      ==================================================================================
Weighted average fair value of
   grants                                  $0.69                      $0.69                        $0.69
Price range of options/warrants
   Exercised                                 --                          --                          --
Price range of options/warrants
   outstanding                         $0.81 - $10.00              $0.81 - $10.00               $0.81 - $10.00
Price range of options/warrants
   exercisable                         $0.81 - $10.00              $0.81 - $10.00               $0.81 - $10.00

The following table summarizes  information about stock options  outstanding and
stock options  exercisable,  as granted to both employees and non-employees,  at
December 31, 2003:

                                        Employees                                             Non-Employees
                                        ---------                                             -------------

                                         Weighted
                                         Average                                                  Weighted
   Range of                             Remaining                                                 Average            Weighted
   Exercise               Number       Contractual    Weighted Average          Number           Remaining           Average
    Prices             Outstanding        Life         Exercise Price        Outstanding     Contractual Life     Exercise Price
--------------------------------------------------------------------------------------------------------------------------------
$0.81 - $2.50           1,627,500          4.3              $1.62                35,000             7.4              $1.00
$5.13 - $9.68           1,523,500          7.0              $7.09               580,000             1.3              $8.70
$10.00 - $11.50           335,000          3.3             $10.00               500,000             1.8              $10.75
                      -----------                                           -----------
                        3,486,000                                             1,115,000
                      ===========                                           ===========

Options and warrants  outstanding as of December 31, 2003,  2002 and 2001 expire
from March 7, 2004 through October 29, 2013, depending upon the date of grant.

During  1999,  the  Company  implemented  a  defined  contribution  plan for its
employees.  The Company's contribution to the plan is based on the amount of the
employee plan contributions. The Company's contribution cost to the plan in 2003
and 2002 was approximately $201,000 and $179,000, respectively.

NOTE 11 - TRANSACTIONS AFFECTING STOCKHOLDERS' EQUITY

On  September 8, 1998,  the  Company's  Board of  Directors  declared a dividend
distribution of Common Stock Purchase Rights (the "Rights"),  thereby creating a
Stockholder  Rights  Plan  (the  "Plan").   The  dividend  was  payable  to  the
stockholders   of  record  on  September  25,  1998.  Each  Right  entitles  the
stockholder  of record to purchase from the Company that number of Common Shares
having a combined market value equal to two times the Rights exercise price


                                      F-15


of $45. The Rights are not exercisable  until the distribution  date, which will
be the earlier of a public  announcement that a person or group of affiliated or
associated persons has acquired 15% or more of the outstanding common shares, or
the announcement of an intention to make a tender or exchange offer resulting in
the  ownership of 15% or more of the  outstanding  common  shares by a similarly
constituted  party.  The dividend has the effect of giving the stockholder a 50%
discount on the share's  current market value for exercising  such right. In the
event of a cashless  exercise of the Right,  and the acquirer has acquired  less
than a 50% beneficial  ownership of the Company,  a stockholder may exchange one
Right for one common share of the Company.  The Final  Expiration of the Plan is
September 25, 2008.

Since the inception of the stock buy-back program in January 1998, the Board has
subsequently  increased  the  authorization  on  five  occasions,  for  a  total
authorized  buy-back of 5,000,000  shares or  approximately  38% of the previous
shares  outstanding.  Such shares are  reflected  as treasury  stock and will be
available for general corporate purposes.  From the initiation of the plan until
December  31,  2003,  4,159,191  shares  have  been  repurchased  at a  cost  of
$24,042,801  or an average cost of $5.78 per share.  No shares were  repurchased
during either 2003 or 2002, an amount of 30,000 shares were  repurchased  during
2001 at a cost to the Company of $30,131.

As a result of the  litigation  relating to the case against  Nutritional  Foods
Corporation,  in March of 1998, a subsequent  order of the Court of Common Pleas
of Bucks County  modified the decree of January 23, 1997 to provide for a return
to treasury of 604,928  shares to the  Company.  As payment for legal  services,
118,066 of these  shares  were  reissued  with a market  value of  approximately
$1,145,358.  This value, the cost of reacquiring  these shares,  then became the
value of the net treasury stock ($2.35 per share)  represented by 486,862 shares
returned to treasury.

On April 9,  2002,  The  Quigley  Corporation  entered  into an  agreement  with
Forrester  Financial  LLC,  ("Forrester")  providing  for  Forrester to act as a
financial  consultant to the Company.  The consulting  agreement commenced as of
March 7, 2002 for a term of twelve months,  but may be terminated by the Company
in its sole discretion at any time. As compensation  for services to be provided
by Forrester to the Company, the Company granted to Forrester, or its designees,
warrants to purchase up to a total of 1,000,000  shares of the Company's  common
stock.  The  Company's  financial  statements  reflect a  $1,125,000  (restated)
non-cash  charge in 2002  resulting  from the granting and  exercising  of these
warrants.  The warrants have three exercise prices, 500,000 warrants exercisable
at $6.50 per share,  which were  exercised in May 2002  resulting in cash to the
Company in the amount of $3,250,000,  250,000 warrants  exercisable at $8.50 per
share, and 250,000  warrants  exercisable at $11.50 per share. The warrants were
initially  exercisable  until the  earlier to occur of (i) March 6, 2003 or (ii)
the termination of the Consulting Agreement.

On December 7, 2002, Forrester commenced an action by a Writ of Summons filed in
the Court of Common Pleas of Bucks County,  PA against The Quigley  Corporation.
No Complaint  was filed  detailing  the claim of  Forrester  against The Quigley
Corporation.  This action was terminated  with prejudice by Forrester as part of
its Amended and Restated  Warrant  Agreement (the "Amended  Agreement)  with The
Quigley  Corporation  on February 2, 2003  whereby  certain  warrants  that were
scheduled to expire on March 7, 2003 were extended to March 7, 2004 (warrants to
purchase 250,000 shares at $8.50; warrants to purchase 250,000 shares at $11.50)
are  no  longer  cancelable  by the  Company.  As an  additional  part  of  this
agreement, Forrester was granted warrants to purchase 250,000 shares at any time
until March 7, 2004 at the price of $9.50 a share.  As a result of this  Amended
Agreement the Company recorded a further non-cash charge of $975,000  (restated)
in the  fourth  quarter of 2002,  amounting  to a total  expense of  $2,100,000,
classified  as   administrative   expense  in  the  Consolidated   Statement  of
Operations,  relating to this warrant agreement in 2002. Additionally,  $975,000
is  reflected in the  Consolidated  Balance  Sheet at December  31, 2002,  which
represented  the value of the  unexercised  warrants  and is included in accrued
liabilities. On March 7, 2003 this liability was converted to equity.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Certain  operating  leases for  office and  warehouse  space  maintained  by the
Company resulted in rent expense for the years ended December 31, 2003, 2002 and
2001,  of  $255,078,  $236,304  and  $218,456,  respectively.  The  Company  has
approximate future obligations over the next five years as follows:

                         Research and        Property
          Year            Development         Leases            Total
          -------------------------------------------------------------
          2004            $1,500,000         $212,000        $1,712,000
          2005                    --          198,000           198,000
          2006                    --           98,000            98,000
          2007                    --           57,000            57,000
          2008                    --               --                --
          -------------------------------------------------------------
          Total           $1,500,000         $565,000        $2,065,000
          -------------------------------------------------------------


                                      F-16


Additional  advertising  and research and  development  costs are expected to be
incurred during the remainder of 2004.

During 1996,  the Company  entered into a licensing  agreement  resulting in the
utilization of the zinc gluconate  patent. In return for the acquisition of this
license,  the Company  issued a total of 240,000  shares of common  stock to the
patent holder and attorneys during 1996 and 1997. The related  intangible asset,
approximating  $490,000 was amortized over the remaining life of the patent that
expired in March 2002.  The  Company  was  required to pay a 3% royalty on sales
collected,  less certain deductions, to the patent holder throughout the term of
this agreement, which also expired in 2002.

The Company also maintains a separate  representation and distribution agreement
relating to the development of the zinc gluconate  glycine product  formulation.
In return for exclusive  distribution rights, the Company must pay the developer
a 3% royalty and a 2%  consulting  fee based on sales  collected,  less  certain
deductions,   throughout  the  term  of  this   agreement,   expiring  in  2007.
Additionally,  a founder's  commission  totaling  5%, on sales  collected,  less
certain deductions,  is paid to two of the officers,  who are also directors and
stockholders of the Company, and whose agreements expire in 2005.

The expenses for the respective periods relating to such agreements  amounted to
$1,805,294,  $1,421,475  and  $1,399,847,  for the twelve  months  periods ended
December  31,  2003,  2002 and 2001,  respectively.  Amounts  accrued  for these
expenses at December 31, 2003 and December 31, 2002 were  $915,109 and $603,387,
respectively.

The Company has an  agreement  with the former  owners of the Utah based  direct
marketing and selling company, whereby they receive payments, currently totaling
5% of  net  sales  collected,  for  use  of  product  formulations,  consulting,
confidentiality and non-compete  agreements.  Amounts paid or payable under such
agreement  during the twelve months  periods ended  December 31, 2003,  2002 and
2001 were $880,091,  $678,454 and $448,647  respectively.  Amounts payable under
such  agreement  at December  31, 2003 and  December  31, 2002 were  $68,388 and
$63,866, respectively.

In August 2003,  the Company  entered into a licensing  agreement  with a patent
holder  relating to utilizing a nasal spray product in the treatment of symptoms
of the common cold.  The Company  agreed to pay the patent  holder a two percent
royalty  on  net  sales  of  nasal  spray  products,  less  certain  deductions,
throughout  the term of this  agreement,  expiring  no later  than  April  2014.
Amounts  paid or payable  under such  agreement  during the twelve  month period
ended December 31, 2003 were $26,613,  and zero in the 2002 and 2001  comparable
periods.  An amount of $1,613  relating to this agreement was accrued or payable
at December 31, 2003.

                                TESAURO AND ELEY

In September,  2000, the Company was sued by two individuals  (Jason Tesauro and
Elizabeth Eley, both residents of Georgia), on behalf of a "nationwide class" of
"similarly  situated  individuals," in the Court of Common Pleas of Philadelphia
County,  Pennsylvania.  The  Complaint  alleges  that the  Plaintiffs  purchased
certain Cold-Eeze(R)  products between August,  1996, and November,  1999, based
upon  cable  television,  radio  and  internet  advertisements  which  allegedly
misrepresented  the  qualities  and  benefits  of the  Company's  products.  The
Complaint   requests  an  unspecified   amount  of  damages  for  violations  of
Pennsylvania's   consumer   protection   law,  breach  of  warranty  and  unjust
enrichment, as well as a judicial determination that the action be maintained as
a class action.

In October,  2000,  the Company  filed  Preliminary  Objections to the Complaint
seeking dismissal of the action.  The Court sustained certain objections thereby
narrowing  Plaintiffs'  Complaint.  In May, 2001,  Plaintiffs  filed a Motion to
Certify the Alleged Class.  The Company opposed the Motion.  In November,  2001,
the Court  held a hearing on  Plaintiffs'  Motion  for Class  Certification.  In
January,  2002,  the Court  denied in part and  granted in part the  Plaintiffs'
Motion.  The  Court  denied  Plaintiffs'  Motion  to  Certify  a Class  based on
Plaintiffs' claim under the Pennsylvania  Consumer Protection Law; however,  the
Court  certified  the class based on  Plaintiffs'  breach of warranty and unjust
enrichment claims.

Discovery  has been  completed  and trial has been  scheduled to commence in May
2004.  The Company is  vigorously  defending  this lawsuit and believes that the
action lacks merit.  Based upon the information the Company has at this time, it
believes the action will not have a material impact to the Company.  However, at
this time no prediction as to the outcome can be made.

                               GOLDBLUM AND WAYNE

A Special Meeting of the Quigley  stockholders  was held on October 15, 1999, at
which a majority of the shares  entitled  to vote  adopted a  Corrective  Action
Proposal  (initially  reported in the Company's Form 10-Q for the quarter ending
June 30, 1999) to ratify actions previously taken by the Company relating to the
1990 1 for 2.74 reverse  split,  the 1995 1 for 10 reverse  split (the  "Reverse
Splits") and the 1997 1 for 2 forward split (the "Forward  Split").  Pursuant to
the October 15, 1999 Special  Meeting,  the Company  authorized  the filing of a
declaratory  judgment  action in Nevada to determine  the  effectiveness  of the
Corrective Action.

                                      F-17


In August 2000,  the District  Court of Clark County,  Nevada,  held that it had
jurisdiction to decide the Company's declaratory judgment action filed in April,
2000,  against two putative  shareholders  (Thomas Goldblum and Alan Wayne),  in
which the  Company  seeks a  judicial  declaration  that,  based on  stockholder
approval of the Corrective Action Proposal, the Reverse Splits and Forward Split
satisfy  and/or  comply with Nevada law and that the  capitalization  of Quigley
evidenced by the issued and outstanding  shares of common stock and common stock
warrants is as reflected on Quigley's  stock  transfer  ledger on September  10,
1999, the record date of the Special Meeting. The District Court of Clark County
held a  hearing  on this  matter  on March  19,  2002 and  ruled in favor of The
Quigley Corporation. A final judgment has been entered of record by the Court on
June 21, 2002.  The period for appeal of this order to the Nevada  Supreme Court
has expired.

An underlying  claim filed by Goldblum and Wayne in the Court of Common Pleas of
Montgomery  County,  Pennsylvania on March 17, 1996 alleging that the plaintiffs
became owners of 500,000  shares each of the Company's  common stock in or about
1990 and  requested  damages in excess of $100,000  for breach of  contract  and
conversion.

The Company believed that the plaintiffs'  claims were without merit,  barred by
the applicable  statutes of  limitations,  and that the plaintiffs  were, in any
event, limited to claims for approximately 36,000 shares.

The Company vigorously  defended this lawsuit through trial during January 2004,
when a jury  returned a unanimous  verdict in favor of the Company.  Thereafter,
the plaintiffs  filed a motion for  post-trial  relief as a first step toward an
appeal, which the Company regards as without merit and will oppose. Although the
Company  regards any effort by  plaintiffs  to pursue an appeal as lacking merit
and based upon the  information  the Company has at this time,  it believes  the
action will not have a material impact to the Company.  However, at this time no
prediction as to the outcome of this appeal can be made.

                          LITIGATION - FORMER EMPLOYEE

On April 12, 2002,  the Company  commenced a complaint in Equity in the Court of
Common  Pleas of Bucks  County,  PA  against  the  former  President  of  Darius
International Inc., its wholly owned subsidiary,  following  termination of such
President.  The allegations in the complaint include, but are not limited to, an
alleged  breach of fiduciary  duty owed to the  Company.  The Company is seeking
both  injunctive  and monetary  relief.  On or about May 1, 2002,  the defendant
filed a counterclaim  requesting  that the Court declare him the lawful owner of
55,000 stock options,  unspecified  damages  relating to an alleged breach of an
oral contract and for  commissions  allegedly  owed. In addition,  the Defendant
requests  the return of  certain  intellectual  property  used to  commence  and
continue Darius' operations.

The  Corporation  believes  Defendant's  claims are without merit, is vigorously
defending the  counterclaims  and is  prosecuting  its action on its  complaint.
Based upon the  information the Company has at this time, it believes the action
will not  have a  material  impact  to the  Company.  However,  at this  time no
prediction as to the outcome can be made.

NOTE 13 - TERMINATED LEGAL PROCEEDINGS

                        MIKE FORAN VS. INNERLIGHT, INC.,
                         DARIUS INTERNATIONAL, INC., AND
                             THE QUIGLEY CORPORATION

On August 1, 2003, an action was filed with the American Arbitration Association
by Mike Foran  against  Innerlight  Inc.,  a wholly owned  subsidiary  of Darius
International  Inc., which is a wholly owned subsidiary of the Company.  After a
hearing  before the  United  States  District  Court for the  District  of Utah,
Central Division,  Foran withdrew his complaint against The Quigley  Corporation
and the matter was remanded to arbitration.  Discovery began on December 1, 2003
and was  completed  on  December  22,  2003.  Based on the  discovery  of all of
defendants'  documents  and  defendants'   depositions  and  after  interviewing
Innerlight  Inc.'s  witnesses,  the Company  upon advice of counsel  settled the
action for $290,000 and reinstated Foran as an independent representative.

Negotiations  leading to  settlement  were  completed by December 31, 2003 and a
Settlement  Agreement  was entered  effective  January 18, 2004.  As part of the
Settlement  Agreement,  Mr. Foran completely released  Innerlight,  Inc. and The
Quigley  Corporation from any claim arising out of the action  instituted by him
on August 1, 2003 and also any  claim he may have  asserted  against  Innerlight
Inc. or The Quigley Corporation.


                                      F-18


                               INTERVENTION, INC.

An action was filed by Intervention, Inc. on July 2, 2002 in Contra Costa County
Superior  Court  under the  California  Unfair  Competition  Law,  Business  and
Professions Code, Section 17200. The Complaint claims that COLD-EEZE(R) does not
contain  ionic zinc and therefore  does not have the unique  quality the Company
asserts for it. The  Complaint  purports to attack The  Cleveland  Clinic  Study
titled Zinc  Gluconate  Lozenges for Treating the Common Cold and the  Dartmouth
Study,  Zinc  Gluconate and The Common Cold, A Controlled  Clinical  Study.  The
plaintiff  claims  that  the  Dartmouth  Study  is not  double-blind  and is not
randomized.  The plaintiff also claims that The Cleveland Clinic Study is untrue
and deceptive  because it did not conclude that patients  "starting  treatments"
with zinc had a 42% reduction in duration of the common cold and, also,  because
the 42%  reduction in common cold duration is not a reference to average of cold
duration but rather is a reference to the reduction in median duration. There is
also a claim by the plaintiff that there is an implied claim that the results in
the studies have been confirmed by repetition which plaintiff contests.

On the 3rd day of July, 2003, the Contra Costa County Superior Court upon Motion
of The  Quigley  Corporation  issued a Summary  Judgment in favor of The Quigley
Corporation.  On October  24,  2003,  Intervention  Inc.  filed an appeal to the
California  Court of Appeals  from the Summary  Judgment  issued in favor of The
Quigley Corporation. In March 2004, the appeal was withdrawn, with prejudice.

NOTE 14 - RELATED PARTY TRANSACTIONS

In the ordinary  course of business,  the Company has sales  brokerage and other
arrangements with entities whose major stockholders are also stockholders of The
Quigley Corporation, or are related to a major stockholder, officer and director
of the Company. Commissions and other items expensed under such arrangements for
the twelve months periods ended  December 31, 2003,  2002 and 2001 were zero and
$36,979  and   $160,034,   and  are  included  in  sales  and   marketing,   and
administration  expense   classifications  in  the  Consolidated  Statements  of
Operations.  Amounts  payable  under such  agreements  at December  31, 2003 and
December 31, 2002 were zero.

An  agreement  between the Company and the  founders  Mr. Guy J. Quigley and Mr.
Charles A. Phillips,  both officers and stockholders of the Company, was entered
into on June 1, 1995. The founders,  in  consideration of the acquisition of the
Cold-Eeze(R)  cold  therapy  product,  are to share a total  commission  of five
percent (5%), on sales collected,  less certain deductions until the termination
of this agreement on May 31, 2005.  For the years ended December 31, 2003,  2002
and 2001, amounts of $889,340, $692,766 and $651,614, respectively, were paid or
payable under such founder's commission  agreements.  Amounts payable under such
agreements   at  December  31,  2003  and  2002  were   $456,748  and  $301,695,
respectively.

The Company is in the process of acquiring licenses in certain countries through
related party entities whose  stockholders  include Mr. Gary Quigley, a relative
of the Company's Chief Executive Officer.  Fees amounting to $369,000,  $309,493
and $281,250  have been paid to a related  entity  during  2003,  2002 and 2001,
respectively to assist with the regulatory aspects of obtaining such licenses.


                                      F-19


NOTE 15 - RESTATEMENT

During 2003, the Company  changed its accounting for certain  warrants issued in
2002 in  exchange  for  services.  Due to a  cancellation  clause in the warrant
agreement,  the warrants should have been treated as  contingently  issuable and
subject to  variable  accounting,  rather  than the fixed  accounting  initially
applied.  The 2002  consolidated  financial  statements  have been  restated  to
reflect the accounting for these warrants.  The restatement had no effect on the
net loss for the year ended December 31, 2002.  The effects of this  restatement
are summarized below.

                                                              As Previously
                                                                 Reported          As Restated
                                                              ---------------------------------
      BALANCE SHEET
         Accrued consulting                                     $ 1,673,000        $   975,000
         Total current liabilities                                6,512,139          5,814,139
         Additional paid-in-capital                              32,592,222         33,290,222
         Total stockholders' equity                              18,422,817         19,120,817

NOTE 16 - QUARTERLY INFORMATION (UNAUDITED)

The Company has restated its 2002 consolidated  financial statements in order to
properly reflect the accounting for certain warrants issued in 2002.

                                                                                Quarter Ended
                                                        ----------------------------------------------------------------
                                                         March 31,         June 30,        September 30,    December 31,
                                                        ----------------------------------------------------------------
      2003
      Net Sales                                         $8,191,092        $7,004,580        $9,912,227      $16,391,264
      Gross Profit                                       3,694,110         2,765,589         4,487,847        9,063,854
      Administration                                     2,441,720         2,311,887         2,046,915        3,043,324
      Operating expenses                                 4,616,219         3,849,747         4,372,646        6,537,250
      Income (loss) from operations                       (922,109)       (1,084,158)          115,201        2,526,604
      Income (loss) from continuing operations            (892,212)       (1,055,141)          134,129        2,542,147
      Net Income (loss)                                  ($946,561)      ($1,055,141)         $134,129       $2,542,147

      Basic EPS
         Income (loss) from continuing operations           ($0.08)           ($0.09)            $0.01            $0.22
         Net Income (loss)                                  ($0.08)           ($0.09)            $0.01            $0.22
      Diluted EPS
         Income (loss) from continuing operations           ($0.08)           ($0.09)            $0.01            $0.17
           Net Income (loss)                                ($0.08)           ($0.09)            $0.01            $0.17

                                                                 Quarter Ended                      Quarter Ended
                                                                   March 31                           June 30
                                                       ------------------------------      -----------------------------
                                                       As Previously                       As Previously
      2002                                                Reported        As Restated        Reported        As Restated
                                                       -----------------------------------------------------------------

      Net Sales                                         $4,984,532        $4,984,532        $5,053,622       $5,053,622
      Gross Profit                                       2,438,036         2,438,036         1,627,890        1,627,890
      Administration                                     2,514,847         3,969,847         1,735,878        1,390,878
      Operating expenses                                 4,212,159         5,667,159         2,999,511        2,654,511
      Income (loss) from operations                     (1,774,123)       (3,229,123)       (1,371,622)      (1,026,622)
      Income (loss) from continuing operations          (1,735,759)       (3,190,759)       (1,333,979)        (988,979)
      Net Income (loss)                                ($1,700,768)      ($3,155,768)      ($1,450,220)      (1,105,220)

      Basic EPS
         Income (loss) from continuing operations           ($0.16)           ($0.30)           ($0.12)          ($0.10)
         Net Income (loss)                                  ($0.16)           ($0.30)           ($0.13)          ($0.10)
      Diluted EPS
         Income (loss) from continuing operations           ($0.16)           ($0.30)           ($0.12)          ($0.10)
           Net Income (loss)                                ($0.16)           ($0.30)           ($0.13)          ($0.10)


                                      F-20



                                                               Quarter Ended                       Quarter Ended
                                                               September 30                         December 31
                                                       ------------------------------     ------------------------------
                                                       As Previously                      As Previously
      2002                                               Reported         As Restated        Reported       As Restated
                                                       -----------------------------------------------------------------

      Net Sales                                         $7,834,325        $7,834,325       $11,399,301      $11,399,301
      Gross Profit                                       3,111,062         3,111,062         5,034,822        5,034,822
      Administration                                     1,987,058         1,367,058         3,653,978        3,163,978
      Operating expenses                                 3,441,779         2,821,779         6,842,777        6,352,777
      Income (loss) from operations                       (330,717)          289,283        (1,807,954)      (1,317,954)
      Income (loss) from continuing operations            (288,853)          331,147        (1,773,512)      (1,283,512)
      Net Income (loss)                                  ($500,395)         $119,605       ($2,803,075)     ($2,313,075)

      Basic EPS
         Income (loss) from continuing operations           ($0.03)            $0.03            ($0.16)          ($0.12)
         Net Income (loss)                                  ($0.05)            $0.01            ($0.26)          ($0.21)
      Diluted EPS
         Income (loss) from continuing operations           ($0.03)             0.02            ($0.16)          ($0.12)
           Net Income (loss)                                ($0.05)             0.01            ($0.26)          ($0.21)

In December 2002, the Board of Directors of the Company  approved a plan to sell
Caribbean  Pacific  Natural  Products,  Inc.  On January 22,  2003,  the Company
completed  the sale of its 60% equity  interest  in  Caribbean  Pacific  Natural
Products,  Inc. to Suncoast  Naturals,  Inc. by exchanging  its 60%  controlling
interest in Caribbean  Pacific  Natural  Products,  Inc.  for 750,000  Shares of
Common  Stock and  100,000  Shares of  Redeemable  Preferred  Stock of  Suncoast
Naturals,  Inc. This transaction  reflects the operation  results and impairment
losses of Caribbean Pacific Natural Products, Inc. as discontinued operations of
the Company for all periods presented.

                     FOURTH QUARTER SEGMENT DATA (UNAUDITED)

--------------------------------------------------------------------------------------------------------------------------
As of and for the three months                         Health and          Ethical
ended December 31, 2003             Cold Remedy         Wellness        Pharmaceutical          Other             Total
--------------------------------------------------------------------------------------------------------------------------

Revenues
  Customers                          $11,040,653        $5,350,611               --                  --        $16,391,264
  Inter-segment                               --                --               --                  --                 --
Segment operating profit (loss)        3,239,962            54,325        ($767,681)                 --          2,526,606
Depreciation                              83,349            41,504               --                  --            124,853
Capital expenditures                      98,476            46,432               --                  --            144,908
Total assets                         $24,892,338        $3,881,970               --         ($2,504,549)       $26,269,759


--------------------------------------------------------------------------------------------------------------------------
As of and for the three months
ended December 31, 2002                                 Health and         Ethical
(Restated Note-15)                   Cold Remedy         Wellness       Pharmaceutical          Other             Total
--------------------------------------------------------------------------------------------------------------------------

Revenues
  Customers                           $6,782,664        $4,616,637                 --                --        $11,399,301
  Inter-segment                               --                --                 --                --                 --
Segment operating profit (loss)       (1,020,196)          172,362          ($485,590)          $15,470         (1,317,954)
Depreciation                              72,091            40,811                 --                --            112,902
Capital expenditures                     119,432            28,921                 --                --            148,353
Total assets                         $26,223,476        $1,401,867                 --       ($2,690,387)       $24,934,956

--------------------------------------------------------------------------------------------------------------------------
As of and for the three months                         Health and          Ethical
ended December 31, 2001              Cold Remedy        Wellness        Pharmaceutical          Other             Total
--------------------------------------------------------------------------------------------------------------------------

Revenues
  Customers                            $6,536,445       $1,763,209               --                  --         $8,299,654
  Inter-segment                                --               --               --                  --                 --
Segment operating profit (loss)         1,893,169         (354,104)       ($161,182)                 --          1,377,883
Depreciation                               67,485           20,477               --                  --             87,962
Capital expenditures                       21,512           34,432               --                  --             55,944
Total assets                          $26,726,729         $826,946               --         ($2,797,880)       $24,755,795


                                      F-21


                     RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of The Quigley Corporation is responsible for the information and
representations contained in this report. Management believes that the financial
statements have been prepared in conformity with generally  accepted  accounting
principles  and that the other  information  in this annual report is consistent
with those  statements.  In preparing  the financial  statements,  management is
required to include amounts based on estimates and judgments,  which it believes
are reasonable under the circumstances.

In fulfilling its  responsibilities  for the integrity of the data presented and
to  safeguard  the  Company's  assets,  management  employs a system of internal
accounting  controls designed to provide  reasonable  assurance,  at appropriate
cost,  that  the  Company's  assets  are  protected  and that  transactions  are
appropriately  authorized,  recorded, and summarized.  This system of control is
supported by the selection of qualified personnel, by organizational assignments
that   provide   appropriate   delegation   of   authority   and   division   of
responsibilities, and by the dissemination of policies and procedures.


/s/ Guy J. Quigley                                              March 26, 2004
--------------------------------------------------------        --------------
Guy J. Quigley, Chairman of the Board,                               Date
(President, Chief Executive Officer)


/s/ George J. Longo                                             March 26, 2004
--------------------------------------------------------        --------------
George J. Longo, Vice President, Chief Financial Officer             Date
(Principal Financial and Accounting Officer)


                                      F-22


                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and
Stockholders of The Quigley Corporation

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements of  operations,  stockholders'  equity,  and cash flows
present fairly, in all material respects,  the financial position of The Quigley
Corporation and its  subsidiaries at December 31, 2003 and 2002, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period  ended  December  31,  2003  in  conformity  with  accounting  principles
generally accepted in the United States of America.  These financial  statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally  accepted in the United States of America,  which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As further  discussed  in Note 15, the  Company's  2002  consolidated  financial
statements have been restated to revise the accounting for certain warrants.


/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
March 26, 2004


                                      F-23


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Based on their  evaluation,  as of the end of the period covered by this report,
the Company's Chief Executive Officer and Chief Financial Officer have concluded
the Company's disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 under the Securities Exchange Act of 1934) are effective. There have been
no  significant  changes in  internal  controls or in other  factors  that could
significantly  affect these controls subsequent to the date of their evaluation,
including any  corrective  actions with regard to significant  deficiencies  and
material weaknesses.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The  information  required under this item is  incorporated  by reference to the
Company's Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

The  information  required under this item is  incorporated  by reference to the
Company's Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required under this item is  incorporated  by reference to the
Company's Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required under this item is  incorporated  by reference to the
Company's Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The  information  required under this item is  incorporated  by reference to the
Company's Proxy Statement for the 2004 Annual Meeting of Stockholders.


                                      -22-


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

      (a)   Exhibits:

            3.1     Articles  of  Incorporation  of the  Company  (as  amended),
                    (incorporated  by reference to Exhibit 3.1 of Form  10-KSB/A
                    dated April 4, 1997)

            3.2     By-laws of the Company as currently in effect  (incorporated
                    by  reference to Exhibit 3.2 of the  Company's  Registration
                    Statement  on Form  10-KSB/A  filed with the  Commission  on
                    April 4,  1997 and  Exhibit  99.3 of the  Company's  Current
                    Report on Form 8-K filed with the  Commission  on  September
                    21, 1998)

            4.1     Specimen Common Stock Certificate (incorporated by reference
                    to Exhibit 4.1 of Form 10-KSB/A dated April 4, 1997)

            10.1    1997 Stock Option Plan (incorporated by reference to Exhibit
                    10.1 of the  Company's  Registration  Statement  on Form S-8
                    (File No. 333-61313) filed with the Commission on August 13,
                    1998)

            10.2    Exclusive  Representation  and Distribution  Agreement dated
                    May 4, 1992  between the  Company  and  Godfrey  Science and
                    Design,  Inc. et al  (incorporated  by  reference to Exhibit
                    10.2 Form 10-KSB/A dated April 4, 1997)

            10.3    Employment  Agreement dated June 1, 1995 between the Company
                    and Guy J.  Quigley  (incorporated  by  reference to Exhibit
                    10.3 of Form 10-KSB/A dated April 4, 1997)

            10.4    Employment  Agreement dated June 1, 1995 between the Company
                    and  Charles  A.  Phillips  (incorporated  by  reference  to
                    Exhibit 10.4 of Form 10-KSB/A dated April 4, 1997)

            10.5    Exclusive   Master   Broker   Wholesale    Distributor   and
                    Non-Exclusive National Chain Broker Agreement dated July 22,
                    1994 between the Company and Russell Mitchell  (incorporated
                    by reference to Exhibit 10.7 of Form 10-KSB/A dated April 4,
                    1997)

            10.6    Licensing  Agreement  dated  August  24,  1996  between  the
                    Company,   George  A.  Eby  III  and  George  Eby   Research
                    (incorporated  by reference to Exhibit 10.6 of Form 10-KSB/A
                    dated April 4, 1997)

            10.8    United States  Exclusive  Supply  Agreement  dated March 17,
                    1997  (Portions  of this  exhibit are omitted and were filed
                    separately with the Securities  Exchange Commission pursuant
                    to  the  Company's   application   requesting   confidential
                    treatment  in  accordance  with Rule 406 of  Regulation C as
                    promulgated  under the Securities Act of 1933,  incorporated
                    by reference  to Exhibit  10.5 of Form SB-2 dated  September
                    29, 1997). See exhibit 10.18.

            10.9    Consulting  Agreement  dated May 4, 1992 between the Company
                    and Godfrey Science and Design, Inc. et al. (incorporated by
                    reference  to Exhibit 10.5 of Form  10-KSB/A  dated April 4,
                    1997)

            10.10   Employment  Agreement  dated  November 5, 1996,  as amended,
                    between  the  Company  and George J.  Longo (the  Employment
                    Agreement is  incorporated  by reference to Exhibit 10.10 of
                    Form  10-KSB  dated March 30,  1998 and the  amendments  are
                    attached hereto)

            10.11   Employment  Agreement  dated  January 1, 1997,  as  amended,
                    between  the  Company  and Eric H.  Kaytes  (the  Employment
                    Agreement is  incorporated  by reference to Exhibit 10.11 of
                    Form 10-KSB dated March 30, 1998 and amendments are attached
                    hereto)

            10.12   Rights  Agreement  dated  September  15,  1998  between  the
                    Company  and  American  Stock  Transfer  and  Trust  Company
                    (incorporated  by  reference  to Exhibit 1 to the  Company's
                    Registration Statement on Form 8-A filed with the Commission
                    on September 18, 1998)


                                      -23-


            10.13   Consulting agreement dated March 7, 2002 between the Company
                    and Forrester  Financial LLC (incorporated by reference from
                    Exhibit 99.1 to Form 8-K filed on April 11, 2002.)

            10.14   Warrant  agreement  dated March 7, 2002  between the Company
                    and Forrester  Financial LLC (incorporated by reference from
                    Exhibit 99.2 to Form 8-K filed on April 11, 2002.)

            10.15   Agreement  dated  February  2, 2003  between the Company and
                    Forrester  Financial  LLC  (incorporated  by reference  from
                    Exhibit 99.3 to Form 8-K filed on February 18, 2003.)

            10.16   Amended and Restated  Warrant  Agreement  dated  February 2,
                    2003  between  the  Company  and  Forrester   Financial  LLC
                    (incorporated  by  reference  from  Exhibit 99.4 to Form 8-K
                    filed on February 18, 2003.)

            10.17   Share  agreement  effective  as of December 31, 2002 between
                    the Company and Suncoast  Naturals,  Inc. is incorporated by
                    reference  to Exhibit  2.1 of Form 8-K filed on  February 6,
                    2003.

            10.18*  Third Amendment to Untied States Exclusive Supply Agreement.

            23.1*   Consent   of    PricewaterhouseCoopers    LLP,   Independent
                    Accountants, dated March 26, 2004.

            31.1*   Certification of Chief Executive Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

            31.2*   Certification of Chief Financial Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

            32.1*   Certification  of the President and Chief Executive  Officer
                    pursuant to 18 U.S.C.  1350, as adopted  pursuant to Section
                    906 of the Sarbanes-Oxley Act of 2002.

            32.2*   Certification of the Chief Financial  Officer pursuant to 18
                    U.S.C.  1350,  as  adopted  pursuant  to  Section 906 of the
                    Sarbanes-Oxley Act of 2002.

       *    Filed herewith

      (b)   Reports on Form 8-K

            The Company filed a report on 8-K, Item 5. On January 22, 2003,  the
            Board appointed Stephen W. Wouch to fill a vacancy on the Board. Mr.
            Wouch is a  certified  public  accountant  with 19  years of  public
            accounting  experience  as a partner and is the Managing  Partner of
            Wouch, Maloney & Co., LLP, Certified Public Accountants.


                                      -24-


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

THE QUIGLEY CORPORATION


/s/ Guy J. Quigley                                               March 30, 2004
-------------------------------------------------                --------------
Guy J. Quigley, Chairman of the Board, President,                      Date
Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Company in the
capacities and on the dates indicated:

Signature                                         Title                                      Date
---------                                         -----                                      ----


/s/ Guy J. Quigley                 Chairman of the Board, President,                    March 30, 2004
Guy J. Quigley                     Chief Executive Officer and Director


/s/ Charles A. Phillips            Executive Vice President, Chief Operating            March 30, 2004
Charles A. Phillips                Officer and Director


/s/ George J. Longo                Vice President, Chief Financial                      March 30, 2004
George J. Longo                    Officer and Director (Principal
                                   Financial and Accounting Officer)


/s/ Jacqueline F. Lewis            Director                                             March 30, 2004
Jacqueline F. Lewis


/s/ Rounsevelle W. Schaum          Director                                             March 30, 2004
Rounsevelle W. Schaum


/s/ Stephen W. Wouch,              Director                                             March 30, 2004
Stephen W. Wouch,


                                      -25-`